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Full text of "American perspectives of Aramco, the Saudi-Arabian oil-producing company, 1930s to 1980s : oral history transcript / 1995"

University of California Berkeley 



Regional Oral History Office University of California 

The Bancroft Library Berkeley, California 



AMERICAN PERSPECTIVES OF ARAMCO, THE SAUDI-ARABIAN OIL-PRODUCING 

COMPANY, 1930s TO 1980s 



Interviews with: 

Frank Jungers 

Paul and Elizabeth Arnot 

Baldo Marinovic 

William L. Owen 

R. W. "Brock" Powers 

Peter Speers 

Ellen Speers 



With an Introduction by 
Frank Jungers 



Interviews Conducted by 

Carole Hicke 
in 1992 and 1993 



Copyright 1995 by The Regents of the University of California 





Frank Jungers 



Since 1954 the Regional Oral History Office has been interviewing leading 
participants in or well-placed witnesses to major events in the development of 
Northern California, the West, and the Nation. Oral history is a modern research 
technique involving an interviewee and an informed interviewer in spontaneous 
conversation. The taped record is transcribed, lightly edited for continuity and 
clarity, and reviewed by the interviewee. The resulting manuscript is typed in 
final form, indexed, bound with photographs and illustrative materials, and 
placed in The Bancroft Library at the University of California, Berkeley, and 
other research collections for scholarly use. Because it is primary material, 
oral history is not intended to present the final, verified, or complete 
narrative of events. It is a spoken account, offered by the interviewee in 
response to questioning, and as such it is reflective, partisan, deeply involved, 
and irreplaceable. 

************************************ 

This manuscript is made available for research purposes. All 
literary rights in the manuscript, including the right to publish, 
are reserved to The Bancroft Library of the University of 
California, Berkeley. No part of the manuscript may be quoted for 
publication without the written permission of the Director of The 
Bancroft Library of the University of California, Berkeley. 

Requests for permission to quote for publication should be 
addressed to the Regional Oral History Office, 486 Library, 
University of California, Berkeley 94720, and should include 
identification of the specific passages to be quoted, anticipated 
use of the passages, and identification of the user. 

It is recommended that this oral history be cited as follows: 

To cite the volume: "American Perspectives 
of Aramco, the Saudi-Arabian Oil-Producing 
Company, 1930s to 1980s," an oral history 
conducted 1992-1993, Regional Oral History 
Office, The Bancroft Library, University 
of California, Berkeley, 1995. 

To cite an individual interview: [ex.] 
Frank Jungers, "From Construction Engineer 
to CEO and Chairman of Aramco, 1948-1978," 
an oral history conducted in 1992 by 
Carole Hicke, in "American Perspectives of 
Aramco, the Saudi-Arabian Oil-Producing 
Company, 1930s to 1980s," Regional Oral 
History Office, The Bancroft Library, 
University of California, Berkeley, 1995. 

I 

Copy no. 



Cataloging information 

AMERICAN PERSPECTIVES OF ARAMCO, THE SAUDI -ARABIAN OIL-PRODUCING COMPANY, 
1930s TO 1980s, 1995, v, 590 pp. 

Personal recollections of eight interviewees whose careers and lives took 
them to Saudi Arabia from the 1930s through the 1980s to participate in the 
growth of an oil company. Aramco shareholders: Chevron (formerly Standard 
Oil Co. of California), Exxon (formerly Standard Oil of New Jersey), Mobil, 
Texaco; multicultural workforce, and efforts at cooperation; training Saudi 
workers; relationships with Saudi rulers and other Middle East governments; 
cultural differences: preservation of culture, and medical modernization; 
daily life in Saudi Arabia; engineering operations; Trans-Arabian Pipeline; 
Aramco management: officers and training; oil pricing difficulties; 
negotiations for ownership participation with Saudis; 1970s boycott and oil 
embargo. 

Interviews with Frank Jungers (b. 1926), engineer, retired chairman and 
CEO; Paul Arnot (1908-1994), chief petroleum engineer and senior vice- 
president; Elizabeth Arnot (b. 1913), Aramco wife, nurse; Baldo Marinovic 
(b. 1925), treasurer, financial officer; William L. Owen (b. 1915), general 
counsel, negotiator; R. W. "Brock" Powers (b. 1926), geologist, corporate 
executive; Peter Speers (b. 1921), translation division head, policy 
planner; Ellen Speers (b. 1921), Aramco wife, observer. 

Introduction by Frank Jungers, retired chairman and CEO, Aramco. 

Interviewed 1992 and 1993 by Carole Hicke. Regional Oral History Office, 
The Bancroft Library, University of California, Berkeley. 



TABLE OF CONTENTS- -American Perspectives of Aramco, the Saudi-Arabian Oil- 
Producing Company, 1930s to 1980s 



INTRODUCTION- -by Frank Jungers i 

VOLUME HISTORY- -by Carole Hicke iv 

Frank Jungers From Construction Engineer to CEO and Chairman of 

Aramco, 1948-1978 1 

Paul and Elizabeth Engineering and Family Life in Arabia 165 

Arnot 

Baldo Marinovic Financial Aspects of Aramco 's Oil Operations, 

1955-1985 215 

William L. Owen Negotiations and Legal Affairs of Aramco, 

1947-1980 285 

R. W. "Brock" Petroleum Geologist to Vice Chairman of Aramco, 

1947-1980 390 

Powers 

Peter Speers Research, Translation, and Policy and Planning, 

Aramco, 1950-1980 466 

Ellen Speers An American Wife in Dhahran 517 

TAPE GUIDE 565 

APPENDICES 568 

A. List of Aramco documents housed at Georgetown University, 

William E. Mulligan Papers 569 

B. "The Arabs tighten the squeeze on Aramco," Business Week, 
December 15, 1973 572 

C. Interview of Paul H. Arnot by William Mulligan, 1986 575 

D. "Fire at Dammam No. 12," by Paul H. Arnot, Al-Ayyam Al-Jamilah, 
Fall 1993 584 

INDEX 587 



INTRODUCTION- -by Frank Jungers 

The history of oil in the Middle East is fascinating because of the 
profound effect that it had on the economic and political systems of the 
world. The Arabian American Oil Company (Aramco) was a large part of 
this history because it became the world's largest oil producing company. 
But, more importantly, the company became a tremendous factor in the 
lives of all Middle East Arabs; especially those who lived in Saudi 
Arabia and the counties along the western side of the Arabian Gulf. 

Many books have been written on this whole broad subject, most of 
which covered oil, politics, economics of the time and the area, but few 
dwell on the effect that the Aramco enterprise had on the people of the 
area. In the short period of fifty or sixty years, the people of Saudi 
Arabia, in particular, were confronted with tremendous changes that 
threatened their culture and, certainly, completely changed their life 
style and aspirations. When considering the profound changes to which 
the Saudi Arab and Gulf Arab societies were exposed in this short period, 
it is indeed a tribute to these remarkable people that they could 
assimilate the impact of Western industrialization and the presence of 
foreign cultures without experiencing the deep dislike and even rebellion 
that occurred in other developing countries where such contrasts were 
even less pronounced. 

Many other factors played a role in this assimilation of phenomenal 
growth, but at the forefront were the farsighted policies of Aramco, 
which were based on the principal that the company behave as a good 
citizen of the country in which it operated. That this would be the 
company's mode of operation was a far-reaching decision, consciously 
taken. The resultant values that the Saudis and Americans shared shaped 
a fifty-five-year record of cooperation and mutual respect on both the 
individual level and the level of company-government relations. It was 
in contrast to elsewhere in the world where man> times, oil companies and 
local governments had adversarial, exploitive, or even colonialist 
relationships. The policies that resulted in the case of Aramco, 
however, included using the best available technologies; maximizing 
training and use of the Saudis; encouraging developing local enterprises; 
and strict observance of Saudi laws and customs. The Saudi government 
and Saudis themselves, in turn, at times bent these laws and customs to 
accommodate the Americans and the needs of industry. A symbolic, but 
significant, early indication of Aramco 's awareness of national 
sensitivities was the renaming of the company in 1944 from California 
Arabian Standard Oil Company to Arabian American Oil Company with 
"Arabian" ahead of "American" in the new name. Similarly, in the early 
'50s, company headquarters were moved from New York to Dhahran. 



ii 



The Aramco policies and the insistence on excellence in all 
operations created a feeling of value and camaraderie between all 
employees, especially Saudi and American. By the mid-1950s, able Saudis 
began to appear in supervisory positions in ever greater numbers. They, 
in turn, had many American and other foreign technicians working for 
them. Their advancement was a result of training and personal 
achievement and tended to accelerate the training effort and subsequent 
Saudi promotions. This Saudization culminated in the ultimate promotion 
of Ali Naimi to President and Chief Executive Officer. 

After the Saudi Government purchased Aramco from its American 
shareholders, the company was renamed "Saudi Aramco." The choice of the 
name recognized the value of the name, Aramco, throughout the Middle East 
and the world, as well as the good will created by the company in the 
Kingdom. In nearly all other oil producing countries, the oil companies 
were nationalized and managed by the government by installing government 
employees into management positions. In Saudi Aramco, the existing 
management, a large majority of which were Saudis remained in place, with 
the Minister of Petroleum as Chairman of the Board of Directors. 

Throughout its development, Aramco kept no official company 
histories, but memories of Saudi and company employees, myself included, 
are a rich source of fact, anecdote, and opinion that illuminate the 
history of Aramco and of Saudi Arabia. Some of the incidents are 
humorous and even somewhat amazing when seen through modern eyes, but 
collectively, they provide a unique perspective on an era that spans much 
of the Petroleum Century and includes the creation and growth of both a 
company and a country. 

Unfortunately, many ex-Aramcons of both nationalities are passing 
on, and with their passing, much knowledge and Aramco lore disappears 
with them. With this in mind, I decided to record some of my memories, 
and in the process of deciding how this might best be done, I became 
aware of the Regional Oral History Office at The Bancroft Library, 
University of California, Berkeley. 

I funded the beginning of the Aramco oral history with the help of 
matching funds from Georgia-Pacific Corporation, on whose Board I serve. 
I found that the Library's expertise worked well for me. In turn I 
encouraged other ex-Aramco executives to enter the program. Brock 
Powers, W. L. Owen, Paul and Elizabeth Arnot, Baldo Marinovic, and Peter 
Speers, along with his wife, Ellen, were then also interviewed and 
contributed to the effort with their own donations. We are hopeful that 
other Aramcons, including Saudis, will continue the effort, and we will 
seek outside funding to assist in the expanded effort. 

The sources of history which today are mostly contained in the minds 
of ex-Aramcons is indeed fragile and short-lived. This is brought home 



ill 



dramatically because Paul Arnot died before he could edit his oral 
history transcript. The recollections and anecdotes of the eight of us 
are contained in this volume. The oral histories were edited by each 
interviewee after they were recorded and transcribed. No effort was made 
by the group to have commonality of views nor to insure absolute accuracy 
of facts and impressions. Also, we were not trying to write a history of 
Aramco, nor Saudi Arabia, nor oil, nor negotiations, nor legal 
occurrences. Rather, it is hoped that these memories and anecdotes will 
be worthwhile "brush-strokes" in an overall painting that will become 
more and more complete as other Aramcons add theirs. 



Frank Jungers 



March 1995 
Portland, Oregon 



iv 



VOLUME HISTORY--by Carole Hicke 



Aramco began producing oil in Saudi Arabia in 1938. Its name then 
was California American Standard Oil Company (Casoc), and it was owned by 
Standard Oil Company of California (Socal), headquartered in San 
Francisco. King 'Abd al-'Aziz had granted Socal the concession in 1933 
to explore for and produce oil in parts of Saudi Arabia, and Dammam Well 
No. 7 finally encountered oil in commercial quantities after five years 
of searching. 

So began the annals of a unique corporate enterprise, unique because 
of its size, its Arabian operations, and its interaction with the people 
of Saudi Arabia. Early leadership by company officers such as Tom Barger 
and Cy Hardy fostered attitudes of pluralism and respect for other 
cultures. The Saudis, for their part, responded with equal measure. 
Great efforts were made by the Americans to train and promote Saudis, and 
great efforts were made by the Saudis to provide for the needs of the oil 
company. Cooperation became the keynote. Aramco 's interest in Arabia 
extended beyond the production of oil. For example, the company used 
its resources to collect and preserve old books and manuscripts 
concerning the history of the country; the medical group established 
clinics in small villages and researched local diseases. Railroads, 
roads, electrification, natural gas recoveryall were added to the 
company's accomplishments to the benefit of the local economy. 

The story of these achievements comes alive in the personal 
recollections of those who participated in them. This oral history was 
undertaken with the intention of recording Aramco 's history from the 
human, personal viewpoint. Documenting more than just the facts, it 
depicts the drama, the humor, the adventure of life in Saudi Arabia, and 
the growth of an oil company. These oral histories include recollections 
of the period from the late 1930s through the 1970s. They begin with the 
time of the concession agreement between Saudis and Americans and bring 
us up to the period when the Saudis acquired ownership of the company, 
now called Saudi Aramco. 

This volume is part of the ongoing documenting of history by the 
Regional Oral History Office, a division of The Bancroft Library, 
University of California, Berkeley. Frank Jungers, former chairman and 
CEO of Aramco, initiated the project with a visit to the Regional Oral 
History Office to discuss his interest in recording the company's 
history; he then contacted other former employees of Aramco, who were 
enthusiastic. Another oral history series conducted by the Regional Oral 
History Office with senior members of the San Francisco law firm of 
Pillsbury, Madison & Sutro offered a strong connection, since the law 
firm acted as general counsel for Socal (now Chevron Corporation) 
throughout much of the relevant period. And Chevron, as one of the four 



shareholder companies of Aramco, was greatly involved in the growth and 
development of the foreign oil company. 

The history of Aramco forms a significant part of the growth of the 
worldwide oil industry. But the oral histories in the project are only a 
small sampling of the rich history of this intercultural achievement. We 
should hear the voices of more of the Americans, and we should record the 
recollections of the Saudis who contributed so much to the success of the 
venture. It is a story that begs to be told, that needs to be 
remembered. 



Carole Hicke 
Interviewer /Editor 



August 1994 

Regional Oral History Office 

The Bancroft Library 

University of California, Berkeley 



Regional Oral History Office University of California 

The Bancroft Library Berkeley, California 



American Perspectives of Aramco, the Saudi-Arabian Oil-Producing 

Company, 1930s to 1980s 



Frank Jungers 
FROM CONSTRUCTION ENGINEER TO CEO AND CHAIRMAN OF ARAMCO, 1948-1978 



Interviews Conducted by 

Carole Hicke 

in 1992 



Copyright 1995 by The Regents of the University of California 



TABLE OF CONTENTS--Frank Jungers 

Interview History 
Biographical Information 

I EARLY YEARS AND EDUCATION 1 

Early Life in Regent, North Dakota and Move to Eugene, Oregon 1 

Engineering Studies, 1943-1947 3 

II BEGINNINGS OF A CAREER AT ARAMCO 5 
Aramco: "The Best Job Offer I Got," 1947 
Move to Saudi Arabia, 1949 

Multicultural Work Force 8 

A Shortage of Riyals 10 

Senior Engineer: Working at the Ras Tanura Refinery, 1951-1955 12 

Working Conditions and Sensitivity to Workers 13 

Providing for an American Work Force in Saudi Arabia 16 

Aramco 's Unique Policy of Cultural Understanding 18 

Incorporating Saudi Attitudes into Company Management 22 

Ilo Boetticelli: Ilo the Pirate 25 

Brief Encounters with King Ibn Saud and King Saud 26 

Tapline, 1949 26 

Political Problems of Tapline 27 

Bringing Tapline Back under Aramco Control 29 

Difficulties of Shared Ownership 30 

Posted Prices 32 

Move to Dhahran, 1955, and Utilizing Saudi Work Force 34 

Scaling Back on Foreign Work Force and Promoting Saudis 38 

Observations of Racial Versus Social Differences 40 

Handpicking Leaders 43 

Developing Education for Children in Dhahran 48 

Building Medical Facilities 51 

Schooling Girls and Women in Saudi Arabia 54 

Hiring Arab Women to Work at Aramco 55 
Building an American Community in an Arab Society: Other 

Difficulties 57 
Catholic-Muslim Mission: Christianity and Islamic Cultural 

Differences 59 

The "Think Committee" 66 
Acting General Supervisor of Industrial Relations: Aramco 's 

Management Training Style 67 

Assistant District Manager, Abqaiq 69 

Learning Arabic in Lebanon, 1962 70 

Reinforcing Arabic by Teaching School in UNRWA Camps 75 

New York: Managing the "Study Group" 78 

Senior Vice President of Concession Affairs, 1965-1971 80 

Harvard Advanced Management Program 81 

Challenges in Concession Affairs: Beginnings of Nationalization 82 

The Formation of OPEC 83 

Misconceptions Regarding OPEC 85 

Government Participation in Aramco 89 

Dealings with Yamani 91 



Dealings with King Faisal 94 

An Incident with the French Press 97 

III PRESIDENT OF ARAMCO, 1971 101 

Move from Concession Negotiations to President 101 

Land Rights and the Aramco Concession 102 

IV CHAIRMAN AND CEO, 1973-1978 105 

Negotiations and Concessions 105 
Negotiating with the Bahrainian Government and Accepting a Gift 110 

Prospects for the Future of the Saudi Monarchy 115 

The Death of King Faisal, 1976 120 

Bedouin Communication 124 

More on Participation 124 

Use of Oil as a Political Weapon 126 
An Attempt to Gather U.S. Support for Arab Nations 

Reporting to King Faisal 130 
Beginnings of the Boycott 

A Summons to Washington 134 
Participation Increases 
More About the Boycott 

Easing of the Boycott 143 

Learning to Deal with the Media 143 

The Kidnapping of Yamani, Vienna, 1975 148 

Inflation of Oil Prices 150 

Gas Production for Internal and External Markets 154 
Electrical Power Distribution: Saudi Consolidated Electrical Companyl55 

ANCOM: Agreements and Negotiations Committee 158 

V LIFE AFTER ARAMCO 16 

Board of Directors, Georgia-Pacific 160 

Board of Donaldson, Lufkin, Jenrette; Thermo-Electron 161 

Other Interests I 62 



INTERVIEW HISTORY- -Frank Jungers 

Frank Jungers is the retired chairman and chief executive officer of 
Aramco, now Saudi Aramco, the oil company that produces most of the oil 
in Saudi Arabia. The company began in 1933 when the Saudi government 
signed an agreement with Standard Oil Company of California opening up 
the country for exploration for oil. Since beginning production in 1938, 
Aramco has grown to be one of the world's greatest producers and exporter 
of oil and natural gas liquids. It became Saudi Aramco in 1988, when the 
Saudi government acquired full ownership. 

The story of Aramco is a unique history of exploration and 
development, of cooperation between government and industry, of 
traditions of loyalty and a reputation for excellence created by enormous 
effort and careful consideration. Frank Jungers was part of that story 
for over forty yearsmany of them in policy-making positions and his 
oral history offers a valuable perspective and documentation of the 
growth of this company. 

This interview is the first of a series of oral histories that 
record personal recollections of Aramco by Aramcons, as they call 
themselves. The interviews were conducted in Jungers 's home on a ranch 
near Three Sisters, Oregon, over a period of several days' concentrated 
effort in August 1992. In preparation, material and information was 
gathered from libraries and some of his colleagues and put into an 
outline, which served to focus topics for discussion. 

Frank and his wife, Julie, entertained me graciously in their 
spacious home over the long weekend when the interviews were taped. 
Frank sat talking in his book-lined study, occasionally diving into a 
file of newspaper clippings or producing a pile of documents pertaining 
to the subject under discussion. Julie joined us now and then, adding 
bits to the conversation. Although she was not with him in Saudi Arabia, 
she has traveled there with him since his retirement. After a day's 
tape-recording, we walked around the ranch, visiting the llamas they are 
raising, and discussing life on a ranch. Only part of their time is 
spent there; they also live in Portland at times, and their frequent 
travels take them around the world. 

The interviews covered Frank's background as well as his career with 
Aramco and other parts of the company's history. It is full of anecdotes 
that illustrate the company's relationship with its host government, 
including the worldwide challenges faced by the industry. The special 
character of Aramco 's "corporate culture," particularly in its ever- 
changing relations with the Saudis, becomes quite dramatic in the 
telling. 

The difference in traditions and cultures between American and Saudi 
often posed problems- -medical care for women was one. "The Arab women 
were out in the villages," Jungers reports, "and they couldn't travel 



alone--didn' t know how to travel alone. So the [Arab] employee had to go 
home when he heard about an illness and get the family and bring them in 
to the hospital, try to get the women taken care of, and take them back 
home." So the company set up clinics in the villages. 

As Frank's career evolved from engineer into management, he was 
instrumental in bringing more Saudis into responsible positions and 
promoting good relationships with the Arabs and the Saudi government. As 
CEO and chairman, he had the difficult job of seeing the Saudi government 
take over ownership of Aramco from the four oil company shareholders. At 
the same time Aramco was undergoing enormous expansion. Jungers actively 
promoted the development of a gas production program -- Aramco had 
previously just flared off the gas -- and he fostered the formation of a 
consolidated power system for the country. 

Since his retirement, Jungers has been actively advising several 
companies where he sits on the board of directors. As a "let's get 
things done now" kind of person, he has much to offer such companies as 
Georgia-Pacific, Equitable Life Insurance Compaiiy, and Thermo-Electron. 

After the tapes were transcribed and reviewed by the Regional Oral 
History Office editor, Jungers went over the transcript carefully and 
made valuable additions and clarified parts of the interviews. 

Merrilee Proffitt, of the Regional Oral History Office, undertook to 
help with preliminary research, reviewed the first draft of the 
transcript, and prepared the final production. To Julie Jungers, Frank's 
second wife, I owe much gratitude for urging upon him the importance of 
the project and for making her help and advice available whenever needed. 

This oral history is part of the ongoing documenting of history by 
the Regional Oral History Office, which is under the direction of Willa 
Baum Division Head, and under the administrative direction of The 
Bancroft Library, University of California, Berkeley. 



Carole Hicke 
Project Director 



January 1994 

Regional Oral History Office 

Berkeley, California 



Regional Oral History Office 
Room 486 The Bancroft Library 



University of California 
Berkeley, California 94720 



Your full naine 



BIOGRAPHICAL INFORMATION 
(Please write clearly. Use black ink.) 
l I S 



Date of birth 



Father's full name 
Occupation 



Mother's full name 

* 

Occupation W/X*C 

Your spouse 

Occupation 
Your children 



Birthplace 




Birthplace 



Birthplace 



Where did you grow up? 
Present community 
Education 



Qccupation(s) 



Other interests or activities 



Organizations in which you are active 




I EARLY YEARS AND EDUCATION 

[Interview 1: August 15, 1992 W 1 

Earlv Life in Recent. North Dakota and Move to Eugene . Oregon 



Hicke: I'd like to start this afternoon with when and where you were 
born . 

Jungers: I was born in the metropolis of Regent, North Dakota, in 1926, 
July 12. 

Hicke: And did you grow up there? 

Jungers: I grew up in Regent and went to the first year of high school 
there, after which my parents moved to Eugene, Oregon, where I 
finished high school. 

Hicke: Why did your family move? 

Jungers: They were farm people. My dad worked for his father on a wheat 
farm. My grandfather owned quite a bit of this little town, 
Regent, and my father worked for him in a grocery store there. 
Gradually the boys --there were thirteen children- -wanted to get 
out of North Dakota and out of the clutches of grandpa, so they 
moved. Of course this move took place in 1939 and no one really 
had any money, so the question was how to make some money. 

He moved to Eugene and bought a service station. He 
selected Eugene because of its mild climate; it was growing and 
it was a university town. 



*. This symbol, //# , indicates beginning or end of tape. See tape 
guide at end of document. 



Hicke: 
Jungers : 

Hicke: 
Jungers : 

Hicke: 
Jungers : 
Hicke: 
Jungers : 



Hicke: 
Jungers : 

Hicke: 
Jungers 



Had he known what he was going to do before he came out to 
Eugene? 

Sort of, but he came out and bought the service station, and when 
he was ready, we- -I drove the family out when I was a freshman in 
high school --we drove out to Eugene and 1 went to school there. 

Did you see anything of the country along the way, or did you 
pretty much head straight out? 

Well, we were headed straight. But of course because we didn't 
have any money, we didn't look for anything. It took three or 
four days of driving in those days. 

The roads must have been terrible. 
The roads [laughter] were just roads. 
Barely. 

Barely roads. I made a lot of mistakes driving. I remember one 
guy going by me in some town in Montana that hollered out the 
window, "Where 'd you get your driver's license? At Sears 
Roebuck?" [laughter] The car was full of packages and bags and 
had stuff tied on top of it. We were really migrating. 

Did you like Oregon when you were there? 

Well, yes. It was a new life and a new school. I went to a high 
school called St. Mary's in Eugene--it's no longer there and 
graduated from that high school. 

What kinds of studies did you like particularly? 

The parochial schools, at that time especially, were very much 
religion oriented, run by the nuns, and we got a lot of religious 
history and Latin and things like that which weren't of 
particular interest to me. But nonetheless, in retrospect the 
school was a good one. My math was good and my other studies 
were good, and it was no problem getting into engineering school 
at Oregon State [University] , which was a good engineering school 
at the time. 



Engineering Studies. 1943-1947 



Hicke: When did you first become interested in engineering? 

Jungers: I don't know. When I think about it, I had an uncle Joe who was 
a bit younger than my dad. He was one of the few of that family 
of boys that went to school, and he was an engineer. I kind of 
looked up to him. I think that's what finally brought it about. 
Sometimes you don't know what really happens to you as a boy, you 
know. 

Hicke: Did you talk to any of your teachers about a potential course of 
studies? 

Jungers: No. They were nuns and [laughter] there was one particularly 

nice nun that I liked, but she didn't know anything about things 
like this. 

Hicke: When you went then to Oregon State as a freshman, did you plan to 
be an engineer? 

Jungers: Yes, I took pre- engineering. But this only lasted about three or 
four months and the war was on. It was 1943, and I was younger 
than my peers by at least a year because I had moved faster 
through grade school than normal, so I felt that I had to get 
into something that would keep me out of the draft in order to 
accomplish something in the service; so I joined the navy V-12 
program, which became the V-5 aviation or pilot training program. 
They were officer training programs. V-5 for air force and V-12 
for other navy. 

I was accepted, and I was sent to Willamette University in 
Salem, Oregon, just down the road from Oregon State, which had a 
V-12 program. We were uniformed. It was taken over by the navy; 
there were no civilians to speak of. 

Hicke: The whole university? 

Jungers: Well, there were a few girls. [laughter] 

Hicke: They must have had a wonderful time! 

Jungers: Oh, they did. We were from all over the country. I went there 
for two semesters, or equivalent of one year. It was a liberal 
arts school, but it was oriented toward law, toward pre-med, and 
toward pre-science. After the year, I applied for an 
engineering- type school and I was transferred to the University 
of Washington. 



Hicke: But still in the navy? 

Jungers: Still in the navy, and where I ultimately graduated after leaving 
the navy. 

Hicke: You have a degree in mechanical engineering? 

Jungers : Yes . 

Hicke: And what year was it that you graduated? 

Jungers: 1947. 

Hicke: By that time the war was over. 

Jungers: By that time the war was over. Well, the war was over, of 

course, in '45. We were given the choice at that time to stay in 
and complete school under the navy program and serve in the navy 
for two or three years as an officer or step out of the program 
and graduate under normal conditions. I chose that [the latter] 
even though my naval supervisors tried to say, "We've given you 
this much, why don't you stay?" 

Hicke: So you got out of the navy? 

Jungers: I got out of the navy under a normal point program and went back 
to the University of Washington as a civilian student. 



II BEGINNINGS OF A CAREER AT ARAMCO 



Aramco: "The Best Job Offer I Got." 1947 



Hicke: What did the job situation look like after graduation? 

Jungers: The job situation was poor. There were plenty of jobs, but a lot 
of them were taken by the older veterans who had had education 
and were coming back into the work force. So the young grads 
were competing with them. The jobs for the new graduates were 
few and paid poorly. 

Aramco at that time was looking for people. They had pretty 
much pulled out of Saudi Arabia in the early '40s and went back 
in 1945 to build a small refinery. 

Hicke: When you say they pulled out, do you mean they shut down the 
drilling operations? 

Jungers: Well, yes. Aramco was started in 1933, and people went into the 
country of Saudi Arabia then because they saw a classic geologic 
dome, or a distinctive, uniformly shaped hill, on the horizon. 
They saw it from Bahrain Island in the Persian Gulf and they went 
in to explore for oil. After drilling on this perfect dome for 
five years or so, they finally drilled a producing well and 
discovered oil in about 1938. 

Hicke: That was Dammam No. 7, is that right? 

Jungers: Dammam No. 7, which is still producing at a considerable rate 

today. They then began to put in minimal facilities to move that 
oil out into small tankers. There wasn't much of a market. When 
the war broke out in earnest in Eastern Africa, there was an 
Italian bombing or attempted bombing that was carried out by a 
single Italian bomber probably flying from Eritrea. The target 



was the Aramco operating facility at Dhahran and the bomb landed 
harmlessly in the desert. So operations were pretty well shut 
down during that period. A skeleton crew of caretaker people 
remained there . 

Aramco returned en force after the war, and by 1947 it had 
been decided- -by then much more oil had been found, in big new 
fie Ids --to do some real expansion work. So Aramco sent 
recruiters to various universities, engineering universities, and 
one such group came to Seattle. It was the best job offer, 
financially, that I got. [laughter] 

Hicke: Do you recall whom you talked to? Was it somebody who came from 
Saudi Arabia? 

Jungers: No, it was an American. The company's main office was, at that 

time, in San Francisco, right near Chevron Corporation. So I was 
hired to go directly to Arabia. But some sort of problem came up 
with visas or lack of living accommodations, so I was temporarily 
assigned to the San Francisco engineering department instead. 
There I became part of a project design effort and went to Arabia 
during the construction for a three -months period later, after 
making the trip back and forth a couple of times. 

I finally transferred to Arabia permanently in '49. In 
preparation for that transfer I was sent to a company- run 
orientation and Arabic language program for six weeks in 
Riverhead, Long Island. The company had leased facilities on an 
abandoned air base there . The school was run by one or two 
Americans who were linguists and who had some Arabian and Middle 
East experience (one was Arnold Sattersthwaite) . 

The teaching staff consisted mostly of Saudi employees who 
were fairly fluent in English and who had experience working with 
Americans. They used material developed by Aramco linguists and 
scholars in things Arabic. We were drilled in basic vocabulary, 
pronunciation and Arabian customs. 

Interestingly, we were encouraged to spend as much social 
time as possible with our instructors, some of which was done in 
a local beer tavern and sandwich place called the "Skyway" or 
"Taneeg as-sema." In retrospect, this experience triggered a 
career- spanning curiosity in me concerning the Arabs, their 
language, and a profound appreciation of their long-standing and 
deep culture. I learned to genuinely like the desert Arab for 
his pragmatism and openness. This experience caused me to 
continue language classes when I arrived in Ras Tanura, Saudi 
Arabia and to learn more about the Middle East by reading and 
associating with Arab friends. 



Hicke: 
Jungers : 
Hicke: 
Jungers : 



Hicke: 
Jungers : 

Hicke: 
Jungers : 

Hicke: 
Jungers : 



What was your engineering project? 

It was an expansion of their Ras Tanura refinery. 

What were you actually building? 

We were expanding an existing refinery at Ras Tanura, and in 
order to do that there were many engineering problems, with 
furnaces mostly, and bigger stacks and heat exchangers. Chevron, 
then called Socal [Standard Oil Company of California], had very 
good engineering capabilities in those areas and Aramco had very 
few experienced engineers. I and engineers like me were assigned 
projects and we would use resources like Chevron engineering. 
For example Milt Ludwig knew the most about furnaces and heat 
transfers. We would pick his brain and assign the engineering to 
Bechtel- -Fred Meyer was the Bechtel project leader and then sort 
of push the project through those people, keep it moving, buy the 
material, and expedite it on to a ship and on out to Arabia. 

Wasn't George Keller in engineering at that point? 

He might have been, but I didn't know him at that time. My boss 
and his boss were engineers from Socal who had transferred to 
Aramco . 

Who were they? 

E.K. (Ernie) Schultz, and J.C. (Jim) Stirton. Both of them were 
very capable engineering people and I learned a lot from them. 

Why were you then transferred to Arabia permanently? 

Well, first because I had originally been hired to go there and 
wanted the experience and secondly because I had done project 
work on this particular project and I think somebody must have 
seen that I had aptitude in this work. Besides, I wanted to go 
out there because it paid better, and so I did. 



Move to Saudi Arabia. 1949 



Hicke: What was it like when you got there? What was going on? 

Jungers: Well, it was a series of camps. Bachelors stayed in barracks. 
Everybody was a bachelor until his wife came over, and usually 
there was up to a two-year wait for family housing. 



Hicke: This is Dhahran we are talking about? 

Jungers: Dhahran, Ras Tanura, and Abqaiq were the three major communities. 
So it was mostly a man's world. We worked long hours six days a 
week. We gradually developed our own recreation desires and 
facilities. It was a job that required a lot of hard work. 

Hicke: You got paid more, but it sounds like you earned it. 
Jungers: We earned it. 



Muliticultural Work Force 



Jungers: The Arabs were, of course, not unfriendly at all, but most of 
them were very unsophisticated villagers or Bedouins that we 
hired to do labor work and to be trained to handle the full scope 
of jobs that exist in an oil company operation in a difficult 
environment. 

Hicke: They were doing elementary construction types of things? 

Jungers: Not even that at first. They were laborers, office boys, coffee 
boys, and so on. A lot of them were just plain students, and the 
company began putting these people in school just to learn some 
basic literate Arabic, English, and basic arithmetic. 

Hicke: There were schools set up there? 

Jungers: They were company schools- -company training programs; ranging 
from a little training program that taught them, "You come to 
work at eight and here's the gate and you go in there," and that 
kind of thing, to on the job training to vocational training; to 
elementary and later secondary academic education. Remember 
there were no public schools in the Eastern province at that 
time. 

Hicke: And our cultural work ethic? 

Jungers: Yes. So they were people that I found to be very interesting and 
they had a culture that was interesting. They had a good 
personal ethic, a lot of pride, and they were true to their 
culture and true to their religion. And we had a lot of fun with 
them. 

At that time, we also had, during the big boom of the 
refinery and terminal building, et cetera, a lot of 



Italians --Italian labor. They were skilled labor that [Benito] 
Mussolini had left on the beach in Asmara and Eritrea [now 
Ethiopia]. These fellows, of course, were men without a country. 
They had no passports. 

They were Italians, all right; that's what they spoke. We 
hired them by the thousands and brought them over and lived them 
in tent camps with no A/C [air conditioning], no anything, and 
they lived separately from the Americans and separately from the 
Arabs. They were all bachelors, of course; they weren't allowed 
to bring any families with them- -they didn't have any families 
with them anyway in Asmara, to speak of. So these fellows were 
our skilled workmen and the Americans were the technical and the 
supervisory people. 

Hicke: So you had three different cultures? 

Jungers: And we had three different languages on our signs: Italian, 

Arabic, and English. [laughter] Even today, as long ago as that 
was, if you go into the Ras Tanura refinery or into some of the 
Saudi villages, some of the older folks still come out with 
phrases that have all three languages in them. 

Hicke: Did those Italians stay? 

Jungers: No. They had no status. They were an expedient work force that 
didn't fit long term into the "Arabian-American" concept. 

These Italians were good craftsmen. Hard workers, 
basically, but they were different people to handle in this 
environment. They were very poor at mixing and working with 
Arabs. They saw them as far beneath them. I recall a foreman we 
had, an electrical foreman, who said he had no problem handling 
the "Eye-talians . " He had his wife make some golden stripes and 
when one did a good job, she sewed stripes on his sleeve. So he 
had a system like that going, which they loved. They wanted 
status, however little- -that ' s how he handled his "Eye-talians." 
[laughter] They actually got paid in lire. 

Hicke: Is that right? 

Jungers: Yes, and the Saudis got paid in riyals and the Americans got paid 
in dollars. 



10 



A Shortage of Rivals 



Hicke : 
Jungers : 



Hicke: 
Jungers: 



Hicke: 



Jungers ; 



Hicke: 



Jungers : 



How do you transliterate 'riyal'? 
R-I-Y-A-L-S. 



Of course the early Saudis had no paper currency. There 
really weren't enough riyals to use as tender. I forgot that in 
the very early days we paid the Saudis in rupees, in Indian 
rupees. Of course, there were some Indians working for the 
company who preferred to be paid in rupees. In and around our 
community, the rupee and the riyal were kind of interchangeable, 
and the advantage of the rupee was that it had paper currency. 
The Saudis often used rupees for paying shopkeepers , but they 
didn't want it, of course. They saw this as not good money. 

Riyals were coins? 

Riyals were only coins, and they were silver. Since more and 
more of the Saudis wanted their pay in riyals, it was decided 
that Thursday afternoon would be payday every other week. Thus 
the work week was shortened to five and a half days every other 
week. Truckloads of riyals pulled up at the accounting office, 
and the employees were paid in sacks full of silver riyals. 
[laughs] It was later that the Saudi government was convinced 
they needed to print paper riyals, after which rupees were no 
longer used. Of course, the Italians got paid in lire. 

Someplace I read that Saudi Arabia started issuing some kind of 
scrip for pilgrims to journey to Mecca and this began to 
circulate as money. 

Well, yes. The concession agreement contained provisions to pay 
the Kingdom a certain amount of money in royalty for each barrel 
produced plus taxes. The royalty portion was payable in gold, so 
even after production went up they still insisted on being paid 
royalty in gold bullion. For a while there was some gold bullion 
minted in the Philadelphia mint that became known as "slugs"- -the 
Aramco Americans called them "slugs" --and these "slugs" were in 
various weights of gold. I don't remember the sizes of the 
"slugs. " 

You are demonstrating about three inches or four inches in 
diameter. 



No, they weren't round, they were rectangular, 
with a stamp on it. 



They were a bar 



Hicke: 
Jungers : 

Hicke: 
Jungers : 



Hicke: 
Jungers 

Hicke: 
Jungers : 
Hicke: 
Jungers : 
Hicke: 

Jungers : 

Hicke: 
Jungers : 
Hicke: 
Jungers : 



11 



Oh, they were deep, too? 

Pretty deep. So these "slugs' 
government as royalties. 



were used for payment to the Saudi 



They were minted for that purpose? 

Yes. Then of course, as production went up with a corresponding 
increase in royalties, this became an impossible thing. Aramco's 
gold purchases to pay the Saudis created price and supply 
problems in the gold market. So that problem along with the 
problems with silver coinage, caused many of the shopkeepers to 
begin to buy and use the British gold sovereign- -which was 
accepted by everyone as good coinage and was denominated readily 
with silver riyals. The Saudi Government not wanting to 
encourage the use of foreign coin- -British sovereigns- -restricted 
their import. However we brought in sovereigns from Bahrain 
Island, which was British run. 

Just in trade or something? 

Yes, we'd go over and trade for them. So all of these problems 
finally led to a paper currency that Aramco encouraged the Saudis 
to produce, and that cut down on the amount of trucks we needed 
to haul silver riyals for payday. [laughter] 

That must have been quite a sight. 

It was . 

About what time did they start producing the paper money? 

It was in the '50s, late '50s, perhaps. 

And what did they do then, bury their gold in something like Fort 
Knox? 

The Saudi government of course kept the gold in the Kingdom 
mostly. Some of it, I imagine, ended up in London. And they 
spent it. That was what the government had to spend. The 
country was poor. 

At that time they were poor? 

Oh, you bet. They had no other significant income. 

But they got quite a good sum- - 

Really, the Aramco payments in those days weren't that large. 



12 



Production was low and the price of oil was cheap. 

Hicke: We are in the decade of the '50s now. Did you have any dealings 
with the Saudi government officials? 

Jungers: No, I was an engineer and I worked in engineering and later in 
maintenance . 



Senior Engineer: Working at the Ras Tanura Refinery. 1951-1955 



Hicke: I have read that in '51 you were a senior engineer and head of 
oil handling and manufacture design. 

Jungers: Yes. At Ras Tanura. 
Hicke: What did that entail? 

Jungers: It was mostly refinery and terminal operation design 
modifications . 

Hicke: Can you explain what that involves? 

Jungers: Well, we had a large refinery, and we provided the engineering 
support for operating that refinery; the terminal and pier 
facilities; and the power plants along with other support 
facilities. 

Hicke: Maintenance? 

Jungers: Maintenance, new projects as well. We instigated new projects. 
If they were big enough, they were farmed out to contractors, 
contract engineering- - 

Hicke: Like Bechtel? 

Jungers: Like Bechtel. We were the support engineering group who either 
did the engineering or supervised the contractors if it was 
contracted out. 

Hicke: Who was your superior at this point? 

Jungers: I reported to a man by the name of Matt Bunyan. And later to Don 
Wassen, who was called our general superintendent of engineering 
and mechanical services. I progressed into a similar kind of a 
job in Dhahran later. 



13 



Hicke: 
Jungers : 



1955 I have. 
Yes. 



Working Conditions and Sensitivity to Vorkerstftf 



Hicke: 



Jungers : 



Hicke: 
Jungers 

Hicke: 
Jungers : 



Hicke: 
Jungers : 



You said you also built recreation areas, 
recreation? 



What kind of 



Well, we had bowling alleys, we had softball fields, we gradually 
built golf courses which were all -sand fairways and all -sand 
greens. They improved gradually. We began to use these little 
strips of astroturf ; if you were in the fairway you would hit the 
ball off the turf so you would save your clubs a bit. 

I was going to ask if you could use regular clubs on that. 



Well, you can, you just wore them out a little, 
some pictures of that. 



I think I've got 



Did you carry your pieces of turf around with you? 

Yes. You carried your turf, and that's the way the game is still 
played there. It was just inappropriate to use water to create 
golf courses in a desert society, even though we had plenty of 
water from wells that were drilled at great depths, and water- 
treating facilities. But in a society where water was the all- 
important item, it was important to recognize the sensitivities 
to water use. 

The company was sensitive; from the very beginning it was 
sensitive to those kinds of things. I think that Fred Davies and 
[Tom] Barger in particular instituted such sensitivities and 
insisted on them. While I was really too young to know Fred 
Davies, I did know Barger, and Barger was a great man in setting 
the proper leads in such areas. He was a student of the culture, 
he spoke Arabic, he studied Arabic. I learned a lot from him as 
a young supervisor. 

Do you know when he happened to come there? 

Barger was an "Arabophile . " He came into the country in the 
early '30s, one of the original geologists, and between him and 
his boss, Cy [Norman] Hardy, they did institute policies that 
recognized the sensitivities and aspirations of the local 
populace. I suppose Barger became head of the company and 



14 



succeeded Hardy probably in the late '50s. 

Norman "Cy" Hardy came to Arabia in the early '50s. He came 
in there while I was still in Ras Tanura and I got to know him 
there. Cy Hardy, while he wasn't an "Arabophile" by any means 
(he came from Chevron's South American operations), he was 
sensitive to the problems you could encounter in foreign 
countries. I, for one reason or another, did see a lot of him. 
I say a lot, I saw him four or five times a year. 

Hicke: And he stayed until? 

Jungers: He retired as chairman in 1969 and was replaced by R.I. (Bob) 
Brougham, who had been president and who had a background as 
chief financial officer and later as senior VP [Vice President] , 
Concession Affairs (Negotiations and Government Relations) . 
Brougham retired in 1971 and was replaced by President Listen F. 
Hills, whose background was engineering and operations. I became 
president and continued to be responsible for Concession Affairs. 
After a little more than a year, Liston Hills encountered some 
serious health problems and retired. I replaced him as chairman 
and CEO. 



Hicke: Let's back up a bit. In the '50s, can you describe your daily 
routine? Did you wear a suit and tie? 

Jungers: Oh, no. No one wore a suit and tie. We went to work early in 

the morning, six o'clock, and left early in the afternoon. This 
was partially in deference to the lower-level Arabs and Italians, 
who couldn't work in the heat- -we didn't have sufficient air 
conditioning, or power enough to run it for them; we had it for 
the Americans and other senior staff. 

Hicke: In the offices? 

Jungers: In the offices and in the homes. So the work days started early. 
And during Ramadan the work days were cut to six hours. 
Employees worked six straight hours. 

Hicke: Six to twelve or something like that? 

Jungers: Yes, something like that. Because, again, they fasted and this 

let them come to work immediately after sunup- -they had had their 
breakfast and then they fasted all day. 

Hicke: They were probably not too energetic by the end of the day. 

Jungers: No, and of course the newly recruited Arabs were not very 

productive. Their health and energy wasn't that good. It was 



15 



soon determined that they simply didn't have the kind of diet 
that would sustain hard work in a harsh climate. So the company 
built in noonday hot meals in special cafeterias. They got a 
hot, nutritious meal for a very small amount of money- -and this 
had a noticeable effect on productivity quickly. 

Hicke: Really? 

Jungers: Oh, it did. To me that was a lesson. If you travel or work in 

underdeveloped countries and then say, "These people are lazy and 
unproductive," one must remember that some of such people have a 
very, very bad diet and very bad living conditions. They are not 
lazy, they are just too tired to work. The same applies even in 
such relatively developed countries as Mexico. Diet, living 
conditions, and proper health care play a major part in 
production of the work force. 

Hicke: Plus I'm sure the climate makes it tough. 

Jungers: Sure. If you have a hot climate, people are not going to work as 
hard; they can't work as hard as they might in proper air- 
conditioned facilities. 



16 



Providing for an American Work Force in Saudi Arabia 



Hicke: That brings up an interesting question: what did you have to eat? 

Jungers: Everything we had was shipped in in the beginning. Nothing came 
from Arabia. There was insufficient food grown there to supply 
the work force . 

Hicke: No fresh vegetables? 

Jungers: Very few. Of course, a lot of the things that were shipped in in 
those days were a long time at sea. So the produce was garbage, 
and the eggs were powdered, and when you got some fresh ones, 
they weren't that fresh. The cigarettes were mildewed, and the 
meat was bad. So the company had to set up better delivery 
schedules on produce and food, develop a better system of 
determining what people really wanted, and to provide facilities 
commissaries et cetera to distribute food and commodities. And 
not just for the Americans, but for all nationalities and levels. 

There were many Americans, especially then, who didn't eat 
lamb or sheep, especially oil field workers and their families. 
They ate chicken and beef. Well, there weren't sufficient 
chickens there either then, and there wouldn't have been enough 
lamb for this ever-growing work force either, even if the people 
would eat it. So the company learned that, for example, you 
couldn't buy out all the food in the local markets and deprive 
the local population. Thus the local economy had to be expanded 
in an orderly way, and imported food and household needs were 
provided to make up the balance. Markets had to be developed in 
Australia and Europe because American food and produce was too 
expensive to ship to the Middle East then. But if they tried to 
buy meat, let's say in Australia- -Australian beef or Australian 
lamb --they had different cuts than we were used to. Thus the 
Australian suppliers had to be taught to supply cuts that 
Americans liked. Back then, people were much more rigid than 
they are today. People hadn't traveled. 

Hicke: It was a much larger world. 

Jungers: Yes, so Aramco had to set up an office in Sydney, Australia, a 

purchasing operation, that went to the meat packers and said, "We 
will buy cuts of various meats in a forecasted quantity provided 
that you cut and package in a manner familiar and acceptable to 
American tastes." [laughter] This was the beginning of the 
Aramco purchasing departments that were set up in Europe and 
Japan, as well, to assure supplies of desirable products and at 
the same time allowed the company to utilize foreign, "soft" 



17 



currency. 
Hicke: Sort of a worldwide operation? 

Jungers: The company had a worldwide problem, not just buying pipe and oil 
supplies and equipment to specification, but food and the minimal 
type of things that people needed to exist. 

A department was created in the company to see what could be 
done about growing produce in Saudi Arabia. There were all kinds 
of starts made on this, but the one that worked, (obviously now) 
is the "county agent" type of system where you went to the people 
and you said, "We want carrots. This is a carrot ."- -they didn't 
eat them- -"We '11 provide you the seed, the fertilizer, and we'll 
help you grow them and we'll buy them from you." They were 
skeptical, but willing to farm for a project. The next thing you 
knew, everybody grew carrots because they were profitable; nobody 
wanted to grow anything else. [laughter] Then you had to go out 
to another grower and say, "We want you to grow radishes." And 
he says, "No, I'm not growing radishes. You get him to grow 
radishes. I'd rather grow carrots." [laughter] 

Hicke: They were afraid radishes wouldn't sell? 

Jungers: That's right. They knew carrots would sell. This developed, 

once the farmers realized the market demand and grew the kinds of 
vegetables that the company stores wanted. It wasn't enough just 
to pay them, you had to begin to teach them how to cook and use 
carrots, because they could best meet the market demand quality- 
wise if they grew produce that they too would consume. Their 
diet had been limited to rice and lamb- -a narrow diet. 

Hicke: That was it? 

Jungers: Well, and dates; there was nothing else. So this was a training 
process. You had to develop a co-op wholesaler who would gather 
the produce and see that it got to the Aramco store, and these 
stores had to also be put in the Arab community so that they got 
some of the produce and you created a demand. Once the demand 
was created, of course, farmers would grow it right provided they 
understood how to do it. 

Hicke: Would you have to provide water? 

Jungers: Well, the oases, it turned out, had plenty of water, but the 

produce wouldn't grow well, and the reason turned out to be that 
their water, artesian water, had been flowing for centuries and 
had salted up the soil due to poor drainage. When things didn't 
grow, the farmer just poured more water to it, which was the 



18 



wrong thing to do. So they had to be taught to cut down on the 
water. What really was needed was drainage, so this water was 
drained away. When the soil leached out and was fertilized, the 
produce would grow. 

It took quite a few years of this activity to develop a 
truly viable industry; so by the early '60s, the country had all 
of the produce it needed and it was exporting many items, 
including chickens, which they learned to grow in better quality 
and quantity. 



Aramco's Unique Policy of Cultural Understanding 



Jungers: One difference, one major difference, was that for all of the 
problems that Aramco had in getting Americans to accept other 
nationalities, in Aramco from the very start there was a big 
effort to make sure that everybody understood that the Italians, 
Arabs, and other nationalities were people- -people who could 
produce excellent work but who had to be assimilated in the work 
force; not only for economic reasons but, in the case of the 
Saudis, because it was their country. Of course, you only have 
to think back a short time to realize that Americans were very 
difficult to motivate in this area. They were the people that 
called Arabs "ragheads," and Italians were "Eye-talians . " And it 
wasn't that they didn't like Italians, it was a racial problem. 
Even Italians were a racial problem then for many Americans. 

I was assigned my first engineering supervisory position. I 
had three or four Italians working for me; among them was a 
draftsman and a photographer who was an interesting character 
named Ilo (the Pirate) Boetticelli. These Italians were very 
good craftsmen, and at that time they had found some old teak 
wood that was dunnage off of a freighter, a lot of it, and they 
spirited it away to the Italian camp, and they built me and 
others, for a price, a teak wood desk that I still have in my 
offices in Portland. A beautiful, good job. These guys were 
good craftsmen. 

I liked these fellows. We had a lot of arguments. They, of 
course, were used to being called by formal titles like "Engineer 
Manzini" and I called him Gus--his first name was Augustus, 
[laughter] It would irritate him, but we got along. 

Some of us would invite them to the house once in a while. 
One night the Italians invited a group of Americans to dinner at 
the Italian camp which, like I said, was a tent camp, and their 



19 



facilities were pretty minimal. But anyway, they made their own 
recreation out there. They had music and they smuggled wine in 
and made their own wine and other spirits- -it was against the 
law. And they lived and worked in shorts. 

Anyway, they invited a group of American friends to their 
camp for dinner one night, with our wives. So we all went out. 
They had a band and they brought in some prize fighters from 
Asmara along with flowers and wine . Maybe there were forty or 
fifty Americans and their wives, and there were a couple of 
thousand of them in the tent camp . 

Hicke: They were all at the party? 

Jungers: Everybody, yes. It was a big party and they had a band. We were 
having a great time, and the Italians, those that knew the 
Americans and their wives, would ask a wife to dance, and some 
did. It was good fun, harmless fun. Suddenly a man who was the 
district manager of the refinery community of Ras Tanura at the 
time entered and climbed to the bandstand. At that time he was 
in total charge of our entire community, which was connected by a 
two- track oil road to Dhahran, the main Aramco management center 
forty miles- -and two hours drive- -away. Telephone communication 
was minimal and so on. So this Texan, he was "the big boss," 
heard about this party. I guess the security people told him, 
and he came out-- 



Hicke: He wasn't invited? 

Jungers: No, he wasn't invited. He had been drinking. He stopped the 
music and said, in effect, "You Americans leave immediately. 
It's a disgrace, your wives dancing with these Eye-talians. Who 
gave you permission to come here? Didn't you know drinking is 
illegal? You get home, and if I catch anybody out here again, 
you will be on a plane." 

So he broke up the party. To him, wives dancing with 
Italians was a racial problem of the highest order. We can laugh 
at this now, but this was serious matter to him. 

These sorts of things happened in spite of the fact that top 
Aramco management policy was directed toward giving every 
employee the status that his job deserved regardless of 
nationality. However, many Americans came from a background of 
discrimination and were placed into a situation that required 
careful emphasis on competence and the realization that we were 
guests in a foreign country. The attitudes of Americans toward 
other races and nationalities have come a long way since then. 



20 



Hicke: But it sounds as if there was a spirit of respect for Arabs and 
other cultures that emanated from Araraco. 

Jungers: Yes, the Aramco culture tended to reject those who didn't respect 
Arabs and others. Those who remained and made an effort found 
the experience rewarding. I was a young guy who had never lived 
where race or non-American issues were a problem. We didn't have 
any races in North Dakota. We had many nationalities who lived 
and farmed together. So these problems were pretty strange to 
me, and as a young employee I understood early on that the Aramco 
policies had merit and got involved early in understanding what 
was needed, not so much because it was demanded, but I just saw 
it as the right thing. 

Hicke: Do you attribute this more or less to Fred Davies? 

Jungers: I can't say that I know that. Davies was the first man in 

charge, and Tom Barger worked for him as an upcoming executive. 
Davies was certainly tolerant and forward looking, but I think it 
was Cy Hardy and Barger that did the pushing and the pace setting 
by example and devising policies. Cy Hardy had gone through a 
lot of problems in South America, and they were the ones that set 
that standard. For example, Cy Hardy at one time invited three 
or four Americans, I was one- -this was kind of a cross-section 
and how he picked us, I don't know- -and some Arabs, mostly 
Saudis, and he had noon discussions. These would happen on, for 
instance, payday Thursday noon when Thursdays were half work 
days . 

Hicke: Noon discussions? This was some kind of a regular meeting? 

Jungers: Well, it happened once a month. He had certain Arabs --there were 
all kinds of Arabs, Saudis and non- Saudis- -and Americans from 
various levels and ages, and we had lunch together. He would 
deliberately pick a subject that was controversial, and lead a 
discussion on things that were controversial or may have been 
sensitive. The Arabs that were there could voice complaints 
about what they saw as mistreatment or policies that weren't 
effective, or we could enunciate the American views on practical 
cultural problems and practical solutions including accelerated 
Saudi training, et cetera. Our frank and sometimes heated 
discussions better defined differences and frequently led to 
better understanding along with solutions to problems. I think 
Cy Hardy did pick out people who were at least a step or two 
removed from policy-making jobs involved in individual problems 
so that practical dialogue could result without preconceived 
solutions . 

Aramco was an ideal company to develop innovative policy 



21 



that allowed two cultures to exist and mesh together with common 
aims. Aramco was unique in that it was not a consortium nor a 
subsidiary, as was the case with most American enterprises 
abroad. Aramco people were not, as a rule, seconded from 
shareholder companies but were Aramco employees. I knew that my 
job was Aramco. If I didn't like my job, I might be able to 
talk, say, Chevron into taking me, but I had no rights and no 
career in San Francisco. 

So you had a different attitude than I saw in subsidiary 
people in other oil companies when we traveled around, where you 
were a person seconded from the New York office and you went out 
to "Timbuktu" for a couple of years and did your "foreign duty" 
time and then went back home where your real career lay. That 
would have created a different attitude entirely. Everything to 
seconded employees was short-term, short-run. "Don't worry about 
participation in long-term, culturally based problems. Just 
complete the foreign assignment with a clean slate." The Aramco 
people had more at stake. Those that didn't like it left for 
other employment, and those that stayed acclimatized themselves 
to the country and its culture and took a long-term view toward 
life and work in the country. 



Jungers: So there came to be a camaraderie among the Americans and among 

the Arabs and between the two, that was very unusual. Today, for 
example, starting the first of September, there is an Aramco 
reunion in North Carolina. There will be many American Aramcons, 
but there will also be Saudi Aramcons attending and all getting 
along in years. There is a feeling of closeness in this group of 
people who had common experiences through the years . Many 
resentments and a lot of problems still exist. People like 
Barger and Hardy and I are well known for taking the lead in 
policies and activities that lessened cultural, nationalistic, 
and even racial tensions over the years. This is one of the 
things I feel proudest of in my career. 

Hicke: It sounds like Aramco was a unique operation. 

Jungers: I think it was. In 1960 Cy Hardy formed a group of four people -- 
I was the junior guy in that group- -to make a tour of a number of 
the oil companies in foreign operations, whether they were 
subsidiary or not, to find out how they operated in comparison to 
what we did and to come up with a plan, as it were, that would 
copy the best of what everybody had and move forward ourselves 
with improved policies. 

Hicke: In social relationships? 



22 



Jungers: Social mostly, but also technical. So we traveled to Iraq, Iran, 
the [Arab] Emirates, Oman, Venezuela, Colombia and just looked at 
their operations. There were many similarities, but more 
differences. I certainly concluded that we had overall the best 
operation in the area of managing our people and trying to be 
good corporate citizens where we operated. There were some 
things- -of course everybody had some pluses, and we tried to use 
those that applied. 

Hicke: Could you give any examples? 

Jungers: I'll try to think of some. The oil companies in Venezuela had a 
much superior system of integrating business-wise with the 
Venezuelan businesses. There they all operated as subsidiaries. 
But we noted that especially Standard of New Jersey (now Exxon), 
which owned most of Creole Petroleum, in Venezuela was doing a 
lot of work in economic development of the area around them to 
further the growth of private business. We too had such a 
policy, but they had done a better job, and we copied some of 
their ideas. 

Hicke: That sounds like a pretty interesting thing to do. 

Jungers: It was, and educational for me. It was the beginning of our Arab 
Industrial Development Department. 

Hicke: Who else went with you? 

Jungers: There was Dan Sullivan, who was head of Aramco's producing 
operations at the time, who also passed away last year. Of 
course , he was much my senior and I later worked for him 
directly. A.C.C. Hill, who was kind of an administrative chief 
of staff to the president. Also, George Mandis, who was a senior 
executive in our Governmental Affairs Department. 



Incorcoratine Saudi Attitudes into Company Management 



Hicke: You told me quite a bit about the attitude of the company towards 
the Saudis; what was the attitude of the Saudis towards the 
company? 

Jungers: Well, you have to realize they then had no conception of what a 
company is or was. To a Saudi then, a company was nothing 
tangible, a company was people. They were used to people running 
things, not companies. So we had to develop a management system 
that accommodated to that somewhat. For example, there were no 



23 



Hicke: 
Jungers : 



Hicke: 
Jungers : 

Hicke: 
Jungers 



Hicke: 
Jungers : 



labor unions; they were forbidden, 
there is no such a concept. 

By the Quoran or the Shari'ah? 



They still are forbidden, 



No, by the Saudi government. It's a monarchy. They had a 
system, the king had a system, still in place, in which any 
subject can see him and, as a matter of fact, every Thursday 
morning he holds open forum or "majlis" where anybody can come in 
and talk. Some of the kings were more effective than others at 
this, of course- -I've sat in this "majlis"- -you would see an old 
guy come up and point his finger and he'd say, "Faisal, you told 
me you were going to fix the water well in . . ." wherever. 

He'd shake his finger at him? 

Yes! "What about it?" And the king would have some of his 
minsters and such around, and he would say, "What about it?" 
They would say, "Well, I thought it was fixed," or-- 

"We'll get to it right away." [laughter] 

He'd tell the government official, "I want that fixed." A water 
well that went down is serious in a desert country. So they had 
that kind of system, and a lot of their grievances and business 
was done this way. In the early days especially it was not 
unusual to be ushered into the office of an official, say the 
minister of petroleum, while other people were in the room. You 
may need to talk about something that you might think is kind of 
confidential, but they are used to having people just kind of 
sitting and waiting for their turn to speak. Also, particularly 
if these people were well known, it was not polite to ask them to 
leave . 

It is less and less that way now. They now have an outside 
office, but in the beginning, there wasn't. So Aramco adopted a 
system, a grievance procedure, that allowed any employee to 
quickly take his grievance to higher management. He could go see 
the chairman if he wanted. 

So Aramco sort of copied their system? 

Aramco copied the idea in modified form. Tried to structure it 
and tried to make them formalize their complaints and go to their 
immediate supervisor first. If he didn't like the answer, that 
boss would write up the complaint and his answer so that the 
employee could say, "Okay, I'm going to your boss," and quickly. 
We tried very hard to make sure that an employee felt free to go 
anywhere he wanted and free to say what he wanted without fear of 



24 



Hicke: 
Jungers : 

Hicke: 
Jungers : 



Hicke: 
Jungers : 



reprisal. So it was not unusual for a low- level employee to go 
see the boss, and if necessary, "the big boss." 

In the early days it really was "the boss" rather than the 
company, and "the king" rather than the government. 

So in things like that we tried to adapt to their system and 
thereby avoid the pressure for a labor union or for referral to 
the government when employees had a grievance, real or imagined. 

That is another example of not imposing our-- 

--our system, bad as it is, on them. [laughter] So we made 
great effort to do that and I think it was quite successful. 

What was their response? 

Oh, sometimes not good, sometimes good. I can remember when I 
was in middle management, one of our most troublesome groups of 
people were truck drivers. These guys drove the big Kenworth 
trucks and they needed to be, therefore, big men. A lot of these 
Kenworth trucks were driven across the desert with their loads to 
remote exploration camps, and so you needed a Bedouin, 
preferably, to find the way and to manage the equipment. These 
fellows were pretty independent characters and they were 
troublesome . 

One particular case that I remember was a guy whom I had 
fired at one point- -and it was a rancorous affair, but anyway I 
fired him. And it stuck even though he made it to the top of the 
grievance ladder. And I ran across him one day in Al Khobar, the 
local town, and this guy comes up, running. He's a big Bedouin 
and he says, "Junger, Junger! Remember me?" I said, "No, I 
don't think so." He said, "Oh, you remember me. ' Inta (you) 
fan-nisht niy (finished me).'" They had converted certain 
English words like "finished" to, "you fin-ished me," using the 
Arabic transliterated verbal endings and all. I said, "Oh. Yes, 
I did." He clapped me on the back and said, "Yes you did!" They 
were not rancorous people. 

He wasn't violent? 

No. He just recognized me and considered himself fairly dealt 
with. I had finished him. [laughter] I said, "Where are you 
working?" Well, he had another truck-driving job and things were 
okay. So a lot of anglicized Arabic words have developed. A 
truck became a "kenwar," (from the much used manufacturers 
Kenworth.) The plural for that is "kenawwar," which is one way 
of making an Arabic word plural. And that word's commonly used 



25 



and everybody knows what that means, "it's a truck." 
Hicke: Were the Arabs generally fairly even dispositioned? 

Jungers: Arabs, I would say if I could generalize- -and I'm not sure that's 
valid- -but Arabs as a group, if you can define what they are, 
tended to be more emotional than some Americans. But again, an 
Italian-American is more emotional than a German- American, 
seemingly, and a Saudi -Arab is probably less emotional than a 
Lebanese -Arab. 



Ilo Boetticelli: Ilo the Pirate 



Hicke: Okay, lets go back to Ilo. 

Jungers: Ilo the Pirate. Ilo Boetticelli. This Italian was a showman, an 
eccentric, and an outstanding photographer. He walked around 
with pirate shorts and pirate-type boots and a silkish-type shirt 
with slits in the sleeves and a bandanna tied on his head like a 
pirate would have it, and he'd say, [imitating Italian accent] "I 
am the great Ilo, the Pirate!" He was a prima donna, but a great 
photographer. When he left Araraco, he went to work down in South 
Africa in Rhodesia. At one point, when I thought about writing 
the sequel to Discovery I [by Wallace Stegner] , I had one of our 
people working on it (Bill Mulligan), and he went down there to 
buy up some of the pictures that Ilo had. Of course the price 
had gone up, but we bought some and copied some. 

But Ilo the Pirate was one of the Italians who live in 
Italian camp near Ras Tanura. 

Hicke: What was the job of the photographer? 

Jungers: Well, we took photographs, progress pictures of plants that were 
being built. 

Hicke: Was this for public relations? 

Jungers: Public relations, things like that, and for employees. Of course 
people needed to get their passports renewed, which required 
pictures. Aramco did everything. We had our own photographer, 
we had our own undertaker, we built our own roads, we built our 
own telephone system, our own sewers, our own everything. We 
started operations in an area which had none of the usual 
amenities for foreigners nor Saudis. 



26 



Brief Encounters with King Ibn Saud and King Saud 



Hicke: Did you ever meet Ibn Saud? 

Jungers: No. I only saw the original king, Abdul Aziz Ibn Saud, known to 
the West as Ibn Saud, once. He came to the Eastern Province in 
about 1951 or '52, I believe it was, and pitched their tents in 
our compound and I saw him from afar. I didn't know him. He, of 
course, died in the early '50s and was succeeded by his eldest 
son, Saud, whose full name under the Arabic system was Saud Ibn 
Abdul al-Aziz Al Saud (Saud, son of Abdul Aziz of the Saud 
family). Ibn or bin means "son of." 

Hicke: And did you meet King Saud? 

Jungers: I met him briefly also, but I was not in the management picture 
at the time, and he was taken out to the yacht club- -of which I 
was the first commodore- -and the club gave him a demonstration of 
water skiing. I had one of my two sons on the little boat that I 
had moored there beside the pier and I told him to sit there and 
be quiet and watch the king as he walked by on the deck. When he 
appeared, Gary said to him, "Hi, king!" [laughter] King Saud 
looked down and grinned and waved at him. Gary was quite proud 
of himself. 

Hicke: Well, let's leave [Ibn al Saud] Faisal until a little bit later. 

Jungers: All right. 

Hicke: Was Saud as tall as his father? 

Jungers: Yes, Saud was a big man. Faisal was also quite big, but more 
frail, not as robust a build; he looked different from his 
brother because he had a different mother. 



Tapline. 1949 



Hicke: I'd like to switch gears here and ask you about Tapline, where it 
was going. Could you tell me when it started and how much you 
had to do with it? 

Jungers: Tapline started as a pipeline project in I think about 1949 or so 
and, of course, it was then a unique project. It went from the 
Persian Gulf to the Mediterranean. It was a thirty- or thirty- 



27 



one -inch pipeline, which in those days was something huge. It 
was the first fully restrained pipeline of that size. 

Hicke: What do you mean by "fully restrained"? 

Jungers: Well, pipelines, prior to the days of fully restrained lines, 

utilized expansion loops in them to compensate for the expansion 
caused by temperature change. Prior to restrained lines, heat 
expanded the steel, and therefore the line expanded, causing 
movement, which would kick it off of its supports. So lines were 
built with U-shaped expansion loops which absorbed the expansion 
and contraction. By firmly restraining the line on its supports 
and by tying it at median temperatures, the line had minimal 
expansion and potential movement which could be restrained by 
rigid supports. The result was better pumping characteristics 
and minimal maintenance. 

Hicke: You regulate the oil temperature? 

Jungers: No, you choose the median ambient temperature to minimize 

expansion and contraction when considering that the line will 
operate at the predictable oil temperature. 

Hicke: When you say "tying it in," what you mean is when you are laying 
the pipe and- - 

Jungers: And welding it together. Obviously, the welding must be done at 
a median temperature of the oil that is transported. The 
alternative is to bury the line which is more expensive. The 
line of course went across a number of countries: Syria, Jordan, 
Lebanon, and later a territory that the Israelis occupied; Saudi 
Arabia. Thus it was buried in places for security and 
environmental reasons . 



Political Problems of Tapline 



Jungers: With an international pipeline went all of the problems that you 
would expect. All transit countries consent to a certain 
agreement before the line is built; everyone is eager to have it; 
but once in place (a pipeline is not on wheels and can't be 
moved) transit governments are prone to make new demands for 
transit fees based upon "changed circumstances" since they want 
more money. International pipelines therefore become involved in 
the economic and politics of the countries which causes great 
insecurity during times of international stress. 



28 



The politics within the countries that we were going across 
changed constantly, most generally because of the Israeli 
situation and the ongoing state of war in the Middle East. So 
that was the problem and the fate of Tapline. 

Also, initially of course, it was a unique line. It was 
laid across hundreds of miles of desert; it transported a 
preponderance of Aramco production at that time; which was an 
alternative to using the Suez [Canal]. Thus it became a separate 
company to separate it from the primary business of producing, 
which was Aramco. That company, Tapline, was therefore operated 
as a sister company to Aramco with the same shareholders. In the 
years after it was built, it became less crucial to the 
enterprise as Aramco 's production increased beyond Tapline 's 
capacity and had to be transported by tanker and as the 
shareholders and the Saudi government realized that the 
instability of Tapline running across countries at war meant 
building additional shipping capacity in the Gulf. 

Hicke: You refer to the Israeli war of 1967? 

Jungers: Well, there was an initial war in '48 that caused the problems 
and then they were ongoing as the politics of the Israeli 
presence in the Middle East became more intolerable to the Arab 
countries and resulted in many incidents including the 1967 war. 

Hicke: But for Tapline, did it change then? 

Jungers: Well, yes, everything changed, but the inherent problems were the 
same. Of course, as these problems worsened due to the wars, the 
politics got worse as Tapline 's capacity impacted less on Aramco 
and the Saudis insisted on better control by Aramco so that they 
could apply leverage on some of the other Arab countries to do 
politically what they wanted done. Finally, for a lot of those 
sorts of reasons, we all decided that the best thing to do was to 
put Tapline under Aramco control and ownership. 

Hicke: When was this? 

Jungers: This was in the '60s. As a matter of fact, that picture 

[indicates photograph] shows Bill Chandler, who was then the 
president of Tapline. He went on the Aramco board when Tapline 
became a subsidiary of Aramco. We moved John Kelberer- -who was 
the second in command to Chandler- -into Aramco and he became my 
replacement. Incidentally, he retired and passed away in 1992. 
So I am the only living ex-Aramco CEO and Ali Naimi is the 
current president and CEO. 



Hicke: 



Ali Naimi? He ' s a Saudi? 



29 



Jungers: He is Saudi, an Aramco Saudi. He would have been CEO very likely 
even if the Saudi government had not become the sole shareholder 
of Aramco. Ali Naimi is a highly talented and motivated man who 
progressed naturally through Aramco 's management development 
program, which was oriented toward selection of management 
irrespective of nationality and based upon achievement and 
potential . 



Bringing Tapline Back under Aramco Control 



Hicke: 
Jungers : 

Hicke: 
Jungers : 



How was Tapline put back under Aramco? 
negotiation? 



Was that a difficult 



Hicke: 
Jungers : 



Hicke: 
Jungers : 



No, it was a matter of convincing the shareholders that this was 
what the Saudis wanted and that it was what Aramco wanted too, 
because it simplified operations, and therefore it was done- -of 
course this raised considerable concerns in Tapline management. 

How about the Tapline shareholders? Did they support this? 

Well, the American shareholders of Tapline were also shareholders 
in Aramco. Of course, there was the argument that if Tapline 
hadn't gone under Aramco when Aramco was sold to the Saudi 
government, Tapline might have been kept under American 
ownership, but that was more hope than a real possibility. 

In any case it was-- 

It was not to be. Of course the CEO of Tapline, Bill Chandler, 
understood this. But some of the middle management at Tapline 
were concerned. Their life was Tapline; they had their own 
culture and operated differently in many ways. At one time, when 
Tapline was initially built, they transported and sold a major 
amount of Aramco 's oil, the majority at one point. But in the 
end, they were a minor part of the oil transportation since 
Aramco had grown tremendously and Tapline 's capacity was, let's 
say, 1.5 million bbls . [barrels] a day, a little more. That was 
a lot when it went into operation in the early '50s; that was 
nearly or potentially everything. But Aramco became a 10 million 
bbl.-a-day company, so it became less needed in that sense. 

Oil that wasn't shipped by Tapline went into tankers? 

Directly. You see, when the trouble broke out with the Israelis 
and when Egypt, then under [Gamal Abdul] Nasser, nationalized the 
Suez Canal, this meant that the tankers that were utilizing the 



30 



Suez Canal were under additional political risk. So Tapline 
became very important again, because it was one outlet around the 
Suez. It was very important until the large supertankers were 
built, which make it economical to ship oil around Africa to 
Europe and the Americas. Then both the Suez and Tapline became 
quite redundant to oil shipments. There wasn't deep enough water 
in the Mediterranean and the Suez Canal to handle the big 
tankers, so the whole economics of tankers has changed and 
Tapline became ever smaller, of ever less importance. 

Hicke: When was the era of the supertankers, or when did it really 
start? 

Jungers: This need was triggered by nationalization of the Suez Canal by 
Garaal Abdul Nasser of Egypt. However the world had already 
become more and more dependent on Persian Gulf oil. Shipping oil 
in small tankers through the Suez Canal and through Tapline just 
couldn't handle the demand. 

Hicke: How much were you involved with Tapline? 

Jungers: Well, I was involved in major ways in the negotiations that took 
place with the Saudis on off -taking Aramco oil and the terms 
under which the oil was taken off, number one. Number two, I was 
involved in a major way with the shareholders in their off-taking 
companies as to the prices that they would pay for the Aramco 
oil, whether they picked it up at Tapline or in the Persian Gulf. 
Now, we need to go back a little bit, bring in some of the off- 
taking problems. 



Difficulties of Shared Ownership 



Jungers: There were ultimately four shareholder companies prior to Saudi 
ownership and their ownership was split 30-30-30-10. Originally 
there was one company, Chevron. Then Chevron sold half of their 
ownership in Casoc [California-Arabian Standard Oil Company] , 
which later became Aramco, to Texaco, because the market wasn't 
yet developed and because they were concerned about the 
tremendous cost that they could see that they would incur in 
developing Saudi Arabia. 

Hicke: Also I've read that Chevron didn't have many marketing outlets. 

Jungers: Oil markets were still small and Chevron realized that their 
share of the market was inadequate to justify development of 
Aramco. So they sold half of Aramco to Texaco, which suited the 



31 



beginnings of CalTex. In the late '40s, the two of them realized 
they too didn't have the market to handle Saudi potential. 
Already there was pressure immediately from the Saudis to produce 
more oil. So it became a Juggling problem between Saudi Arabia 
and the interests those companies had in other countries as to 
where they were going to lift the oil to match the demands and 
needs of the producing countries, but more importantly even, to 
match the economics of moving this oil to consuming areas. 

All of these factors caused them then to say, "Let's sell 40 
percent off to somebody else," and they sold it to Esso and to 
Mobil. Mobil in its wisdom at the time decided it didn't want 20 
percent; it took 10 [percent]. That was the beginning of a whole 
series of never-ending problems involving equity versus varying 
market needs. 

Hicke: Because they were the minority? 

Jungers: They were the minority shareholder. They became more and more 

aggressive in their management and their market needs, and ended 
up needing the oil for the markets. But, to oversimplify again, 
Aramco sold the oil to the off -taking companies, which were 
nominated by the four shareholders; collected the money; paid the 
government its taxes and royalties; invested in the capital 
expenditure, and paid the remainder back to the shareholders as 
dividends based upon their equity. 

That sounds okay, but the governments of the producing world 
began to worry about the prices which companies like Aramco sold 
oil to its off -takers. The governments were paid taxes on the 
basis of the price of the oil sold. That's then what constituted 
the Aramco profit: we sold the oil for a price, we made a profit, 
we paid the tax on that prof it- -it was 50-50; 50 percent tax. 

Hicke: You paid 50 percent of the profit in tax? 

Jungers: Fifty percent in tax. The Saudis and the other countries began 
to worry about the fact that these companies weren't paying 
Aramco what they should be paying Aramco for the oil and that the 
purchasing companies were holding prices too low, in order to 
avoid the tax and thus to make their money downstream. The 
companies of course maintained that the prices paid to producing 
companies like Aramco were market driven. 

So the whole question of pricing was challenged, and a 



32 



system of posted prices was developed. 1 



Posted Prices 



Hicke: I was hoping you were going to get to that. I have heard about 
it. 

Jungers: So we sold the oil at a price that they all posted. 
Hicke: That was a permanent price, is that right? 

Jungers: It was fairly permanent when markets were stable and demand 
growth quite predictable, but the price didn't move with the 
market, because companies were afraid to reduce the prices and 
thus unilaterally reduce the price and unilaterally reduce the 
taxation they were paying the government for fear of losing 
concession arrangements. 

Hicke: When you say unilaterally, you mean the shareholders? 

Jungers: Yes. And so for example the posted price sort of remained 

stable: $1.80 per barrel was the price for a long time, plus or 
minus. When times got tough, and the shareholders were paying 
Aramco $1.80 for the oil but couldn't sell it for $1.80 
downstream, then the posted price was too high. So they took the 
losses selling the oil and made them up with Aramco 's profits. 
We had been paid too high a price and too high a tax, to be sure, 
but as long as we had a profit that was more than the losses they 
had to take downstream, there was a tendency to maintain high 
posted prices. 

But in that manner of accounting, an overstated posted price 
and a fictitious profit in Aramco created a lot of problems. 
Let's assume, for example, that Mobil, a 10 -percent owner, 
developed a market that sold 15 percent of the oil and paid too 
high a posted price for it. But they only got 10 percent of the 
dividends. So they began to say, "Hey you guys, we are selling 
the oil; we are creating a profit not just for us but for you 
guys. We want a different deal." 

To which the answer was, "Fine, that sounds fair. We'll 
give you a different deal." 



1 . Upstream refers to production; downstream refers to 
transportation, refinery and marketing options. 



33 



"Well, we only want a different deal if we can make long- 
range contracts. We can develop this market, but we must make 
long-range contracts, which means we must have long-range access 
to additional oil. So we want a different deal, but we want oil 
in addition to our 10 percent share and want it under long-range 
contract . " 

"Oh, no. No, you are not getting it under long-range 
contract. " 

"Why not?" 

Because these companies were competitors, and they were only 
going to give Mobil a better deal until such time that they could 
take that market source away from them. And so the negotiation 
was continual, and Aramco was the negotiator or the "honest 
broker." In order to assure the Saudi government that Aramco 's 
shareholders were making a best effort to sell Saudi oil, we 
needed to do our part to create an incentive so that if a company 
lifted more oil than its equity share, it was recognized in the 
dividend. A special dividend process was developed that was 
continually changed but was a way of rewarding the shareholder 
who sold the most oil. 

Hicke: Sort of on an ad hoc basis? 

Jungers: No; because of the length of term, these were negotiated 

documents , and they were the dividends Aramco was allowed to pay 
to them by their agreement which deviated from their equity. 
Huge sums of money were involved. Now, complicate that with: 
where did the shareholders lift the oil, up at Tapline or down in 
the Persian Gulf? All of this was part of the costs which 
entered into the amount of dividend paid. Tapline became part of 
this negotiation, and Aramco was the negotiator. 

Hicke: That's what you were involved in? 

Jungers: That's a long way of getting around to saying I was involved in 

that sense. As Tapline became less of a factor at higher 

producing rates, it made less and less sense to have Tapline be 
an entity unto itself. 

Hicke: I am glad you explained all of that about posted pricing. 

Jungers: It is way over simplified- -I 'm not trying to get legalistic in 
this and attempt to explain all of the problems in detail, but 
this pricing problem was why OPEC [Organization of Petroleum 
Exporting Countries] was formed. 






34 



Hicke: Okay, well we'll get to that. 
Jungers: That's a long story. 

Hicke: Going back to the tankers; I don't know when this took place, but 
I wanted to ask you if you knew about or were involved when 
Aristotle Onassis tried to make a contract with the Saudis. 

Jungers: This was started before I was negotiating. When I say 

"negotiating," you've got to remember this was my job as senior 
vice-president. 

Hicke: That was in the '60s? 

Jungers: In the '60s. And at that point, I replaced Bob Brougham who 
became the president, who replaced Barger. 

Hicke: Did you have knowledge about it [the Aristotle affair]? 

Jungers: I knew about it, of course. I was not involved in the beginnings 
of it at all, but I was involved continually in the one problem 
that it created, which was arbitration. This thing was settled 
by arbitration, except that in the future when the settlements 
didn't come out in their favor, governments said, "Hey wait a 
minute, arbitration cannot prevail over sovereignty." And so 
although we tried for years in various ways to put an arbitration 
clause into our contracts with the governments, the governments 
adamantly refused. So we were hamstrung for a long time because 
of this Onassis arbitration result. 

Hicke: That was a successful arbitration for Aramco, but it turned out 
to be detrimental in the long run? 

Jungers: That really did it to us. But of course you can argue that if 

that hadn't done it, well then the next one would have for sure, 
so the problem in all of these negotiations always was the 
sovereignty question which came up in many negotiating instances 
and would have been useful to the companies had the sovereignty 
issue not been used by the governments to thwart it as a process. 



Move to Dhahran. 1955 and Utilizing Saudi Work Force 



Hicke: Well, at some point I want to back up to your move to Dhahran in 
1955. 

Jungers: Dhahran '55. I was moved to Dhahran in '55 or so to take the job 



35 



of general superintendent, it was called- -engineering, mechanical 
services, maintenance, transportation, things like that --in 
Dhahran. We had, at that time, three major districts, and 
Dhahran was one, and this was a "line" job there. 

Hi eke: The other two were Ras Tanura and-- 

Jungers: Abqaiq. Ras Tanura being the refinery area, Abqaiq being 
producing, and Dhahran being some producing but also the 
administrative complex and all that went with that- -centralized 
trucking, centralized mechanical services. Also Tapline 
maintenance --that is, that part of Tapline that was in Saudi 
Arabia. And so on. 

Hicke: Field headquarters? 

Jungers: Field headquarters- -operation and maintenance was in my scope. 
We had and needed a lot of people to cover these functions. I 
think one of the reasons that I was selected for this job was 
because I had demonstrated abilities in handling large 
organizations and people plus a willingness to maximize 
utilization of Saudis. This was necessary from a cost standpoint 
(foreigners were more expensive) but more importantly, Saudi 
aspirations had to be met. 

The thing that struck me then was that we had utilized 
Italians and other nationalities, Pakistanis, Indians, et cetera, 
and continued to utilize them even though we were training 
hundreds of Saudis. We would say, "Well, I want to keep these 
Italians, they have been here for years and they are very good 
workmen. I guess I will send this Saudi to school again for 
another year of math. He's just not ready." [laughter] 

Here we had all of these people, and we were overstaffed, 
because we had all of these Saudis that we had poured into 
training programs, and these Saudis weren't being utilized and 
promoted into jobs being handled by other nationalities. Saudis 
were resentful that they weren't given the jobs that they thought 
they could perform. 

So one of the first things I did in '52 in Ras Tanura (at 
age twenty- six) was to say to craft foremen who worked for me and 
they were all American and mostly old enough to be my father- - 
"Okay, by the end of this coming year, I want a one -quarter 
reduction in all foreign contract labor." This was a blow to 
them because they could more easily get their work done by 
foreigners and were honestly concerned by the possibility of 
reducing work quality by utilizing unproven labor. 



36 



Hicke: 
Jungers : 



Well, we did it, although at first by edict. I tried it by 
discussion and coercion and convincing them, without success. So 
it was by edict. They did it and with dire predictions that 
never came to pass. The Saudis stepped in with a will and 
surprising speed and flexibility. They had in fact been well 
trained by the supervision that was reluctant to use them. So 
this was really the beginning of what I myself saw as the 
necessity to train the Saudis, to integrate them into the work 
force and to devise a series of policies that kept them working, 
and to discontinue a series of policies that were really devised 
for foreigners. 

I was not at first thinking necessarily about Americans, but 
of the many foreigners and all of the different pay and benefit 
packages: paying this one in lire and that one in rupees and this 
one in riyals. Paying expatriate allowances, travel and other 
benefits to be competitive in their countries all of which was 
not understood by the average Saudi worker. Consider changes due 
to exchange rate changes, then the Saudi hollers, "Hey, you are 
paying this guy twice as much as I'm getting," but he didn't know 
the value of the rupee had been halved. All of this was 
difficult to explain especially to a Saudi aspiring to that 
foreigner's job. The good Pakistani was hollering, "Why don't I 
get trained?" The answer is, "You are not getting trained 
because we are not going to need you very long." Which was de- 
motivating to him to say the least, even though there was no 
other explanation to him and contributed to the over-manning. 

That was another thing I had learned on our fact-finding 
trip to Iran in the '60s. When we went there, we couldn't 
believe the manning, it was five times ours. 

And you said you were over-staffed. 

We were over-staffed, but they were five times what we were, and 
proportionately with Iranians. And that condition, I'm 
convinced, contributed heavily to the final blowup in Iran and 
the still lingering resentment of foreigners. The structure was 
a lot different. The structure there was a consortium, and it 
lent itself to this kind of thing, so I want to be clear on that. 

I was a leader in Saudi training and utilization, although 
Barger was certainly behind me and supportive even though I was 
well down in the organization. There was a necessity to train 
Saudis and place them in jobs they were trained for or get rid of 
them, and I did get rid of them. This was an important step. 
All Naimi, the current chairman, was in that group as a coffee 
boy. Aramco trained him; sent him to Stanford [University] for 
his master's. When they were sent for training and they 



37 



succeeded and came back, you had to give them a job that 
corresponded with their achievement. This was the part that was 
missing. Nobody had any trouble sending an All Nairn! to school, 
but what are you going to do when he gets out of school? Either 
he becomes a significant employee with a significant career or he 
becomes an embittered malcontent in due course. 

Hicke: I've got a quote here that I just want to get in for the record, 
I don't even know where I read it, but I read someplace that you 
"transformed a collection of malcontents to a proud work force." 

[Julie Jungers enters room] 
Jungers: Well, I did that. 

[to Julie Jungers] I told her the story of "you fan-isht-nie . " 
JJ : And they loved it. We were there in February- - 
Jungers: That was her first trip. 
Hicke: Last February you were there? 
J J : Yes, that was my first trip. 

Jungers: I was involved on this trip with a contractor, a businessman out 
there now, Abdullah Ar-Rushaid, who, in the early days was also 
one of our "golden ladder" young employees. We set up a system 
that identified these people early as high potential and worthy 
of accelerated training due to intelligence, motivation and 
overall interest. Later he might be identified for management 
potential. Take him off the list if you made a mistake, but 
start listing them. This businessman who left us along with 
people who stayed like Ali Naimi, all were identified early. 



Jungers: The Saudis would clamor at the gates for employment, and the 

rules were that eighteen was the employment age. Many of them 
didn't even know their age to start with, and they were on a 
different calendar besides. The Hijra calendar loses eleven or 
twelve days a year, so their year is different. So many were 
pretty confused about what their age was. Later on we even 
sometimes tried to decide their age by x-raying their wrists. 
This became known in Arabic as "I've been aged." [laughter] Of 
course, when a Saudi got up to retirement age, he had obviously 
been aged too high, and when he was trying to get hired, he was 
aged too low. But all of these efforts were usually accepted in 
good humor. laughter] 



38 



JJ: The Saudis were wonderful. 

Jungers: This became a problem that we finally discontinued because it was 
nothing more than a negotiation anyway. So the guys who got 
hired, and who were likely too young, became known as 'yimkin 
eighteens . ' 

Hicke: How do you spell it? 

Jungers: Yimkin, Y-I-M-K-I-N. Yimkin in Arabic means maybe. So you'd 

say, "Abdullah, how old are you?" "Yimkin eighteen!" He started 
to learn a little English and he knew eighteen was the magic 
number, and who knew? Maybe he was eighteen. He didn't know, 
and if he did, he was merely trying to get a job anyway, so it 
didn't matter. So in the hiring lines the brightest and the 
tallest and the healthiest of the "yimkin eighteens" got hired. 
So Abdullah Ar-Rushaid, the businessman who was telling the 
story, and Ali Naimi, who is barely five feet tall, stood on 
apple crates out in the mob that was trying to get hired and 
waving a paper that they had. [Jungers demonstrates with his 
hands up in the air] "Okay- -you, how old are you?" "Yimkin 
eighteen!" "Okay, come on over!" [laughter] That's how they 
were actually hired. 

And so they became coffee boys , who would bring you coffee 
if you wanted it. And they got sent to school and of course 
that's how the capable and bright ones progressed. Those people 
had to be used more or we would lose. And we were losing just 
because of the fact that we had too many foreigners in the good 
jobs- -in the blue-collar jobs at first and later in the white- 
collar jobs --that the Saudis had been trained for and couldn't 
get because Luigi was too good a man to lose and the Paki was 
also too good a guy to lose and so on. Human reasons, but 
reasons that simply weren't tolerable in Saudi Arabia- -it was 
their country and their resources. 



Scaling Back on Foreign Work Force and Promoting Saudis 



Jungers: In Ras Tanura we were getting the beginnings of strikes over 

this. They weren't strikes, because strikes were disallowed, but 
there were rumblings and slow downs. You would see the Saudis 
just not working, and squabbling and fist fights breaking out 
between them and Italians and this and that. This highlighted 
the problem. 



39 



So when I took a supervisory job in Ras Tanura refinery 
maintenance, I just decreed a 25 percent cut- -a real cut, not on 
organizational charts but a real cut. "How many Italians have 
you got now? End of the year it's 25 percent less. How many 
Pakis? 25 percent less. How many Indians? 25 percent less. If 
you want to switch between them, I'll talk about it, but--." 

Hicke: Was that just one year or did you--? 

Jungers: Well, it was an onward goal. We just kept scaling down 

foreigners and accelerating Saudi training. In Dhahran the first 
Saudi foreman ever made in the company was made in our 
organization. The second, the third, the fourth, the fifth, the 
twelfth were made by me before any were made elsewhere in the 
company. 

Hicke: Why weren't other people making them? 

Jungers: Well, it was the same problem: of course, when you got into the 
foreman level, you were replacing qualified, able, and loyal 
Americans, and now this became painful. Fortunately, the company 
was growing and so the real problem wasn't to let a good American 
foremen go; the real problem was, as you expanded, to refrain 
from promoting another American if possible. And of course this 
hurt the American employee because you were seemingly reducing 
some of his growth potential. But if we had a good, technical, 
blue-collar person, we could create jobs under the foreman. The 
Saudi foreman was the first to say, "Can I keep John Smith with 
me here? But I think I have got to give him a better job if he's 
going to stay working for me." Okay, so sometimes we created 
jobs then. You kept John Smith not as a line supervisor, but as 
a technical supervisor, and he helps your work force in a 
technical way and makes sure that you get them trained well 
technically, but he's not a line supervisor. 

Hicke: So it was a lateral switch? 

Jungers: Well, it might even be a higher level skill and pay wise for 
those truly qualified. 

Hicke: Were there a lot of Americans waiting to become foremen? 

Jungers: Of course. Career people. 

Hicke: What about the foreigners employed? 

Jungers: With the other foreigners, we had to be unilateral. We finally 

adopted the "Saudi American" theme as a policy concept. This was 
a lower level problem. But with supervision it was not quite 



40 



that tough, since very few non-Americans were ever foremen and 
above. [speaking to Mrs. Jungers] You met two of the early 
foremen. The first foreman I made was a guy by the name of Abdul 
Moniem Ben Abdullah. He was a natural leader in spite of not 
being a highly skilled craftsman. He was obviously a leader, and 
in spite of being a Shiite, which was not very well accepted by 
some Saudis. But I made him a foreman anyway, because we were 
having a strike down in the sheet metal shop under an American 
who was a poor supervisor and whose name was David- -and the Arabs 
rebelled because they were trying to get rid of an American who 
they believed disliked Arabs. 

Hicke: What was he doing there? 

Jungers: He was over-promoting other foreigners; so the Arabs said, "This 
guy is a Jew. His name is David!" And this became a rally 
point. [laughter] So I had to remove him and I made Abdul 
Moniem the foreman. I talked to a lot of Arabs before I did it. 

I made him the foreman and he became known by the Americans 
in the organization- -in total people I must have had 3,000 
then- -he became known to American and foreign craftsmen as Abdul 
Bullshit [laughter] because he wasn't really technically 
qualified to be a sheet metal foreman. He was a bullshitter, in 
other words, to the Americans. But to the Arabs he wasn't. He 
was a man who got work done through his people. He was the guy 
who would come in and say, "Frank, you gotta leave me some good 
guys. I mean, I need Americans in here. These Arabs can't yet 
do this work, some of the technical part." 

I said, "You tell me who you want." We found that it became 
no problem. Americans would work for Arabs, Arabs would work for 
Americans, as long as you maintained a semblance of, "I'm trying 
to pick the best guy." Every now and then you would hear that 
you had picked the wrong one, but they still said, "Okay, we'll 
get along." 



Observations of Racial Versus Social Differences 



Jungers: The next guy I wanted to pick as foreman was a black one, a black 
Arab. He was technically very well qualified. I wanted to make 
him a welding foreman. 

Hicke: Was that a problem? 

Jungers: Well, that's what I'm getting at. The Arabs said, "No, don't do 



41 



it." 
Hicke: The Arabs said it? 

Jungers: I asked, "Why? What's the matter with him? Isn't he a good 
welder?" 

"Yes, he's a good welder." 

"Well, why can't we make him a foreman?" 

"You shouldn't make him a foreman, Mr. Frank. You shouldn't 
do it." 

"Why not?" 

"Well--" 

"Because he's black?" 

They would say, "What?" 

"Because he's black?" And I would even say it in Arabic. 
"Because he's black-colored?" 

"No, no. What are you talking about? Black what?" 

They honestly had never thought of it that way. Then I used 
the word , ' zunj i ' . He ' s a zunj i . 

Hicke: What does that mean? 

Jungers: A negro. "No, he's not a negro. He's not a zunj i . " 

I said, "But he's black." 

"No, but he's not a zunj i . " 

A zunj i kind of went the route of a slave, so zunj i to them, 
although meaning negro, had the connotation of slave. "He's not 
a slave. Well, then you don't like him because he's black." 

"No, it's not that." 

"Well, what's the problem?" 

"He's just not from a good family." 

What was truly happening- -and I questioned this because I 



42 



thought they were lying to me. It turned out- -and we made a 
study in a couple of the villages around- -because the Portuguese 
had come in there and they had slaves -- 

Hicke: Even though it was much earlier? 

Jungers: Yes, in the 1500s, Vasco de Gama days. Sure enough some of the 
slaves had gotten ashore and there turned out to be some black 
Arabs. But these black families mostly lived on the wrong side 
of the tracks so-to-speak, not because they were black. I think 
what really happened was these slaves got ashore, they sired some 
black children. In a society that was so rigid that there was no 
promiscuity, nothing out of marriage, they had to have interacted 
with girls who were from bad families and the result remained 
"bad families." They had black children who were still in the 
bad families on the wrong side of the tracks and whatever other 
criteria there were. 

Hicke: And it was a social class thing, rather than racial? 

Jungers: It was social of which the black happened to be a part, more than 
it was a black racial problem. I tested this so many times and I 
really never found it to be primarily a black question. 

Finally, I did test it really. I made a real test. And you 
[Mrs. Jungers] met Khalil. He was a Sudanese by birth. He came 
over to work in Arabia as a Sudanese. He is a big guy with 
flashing big teeth that grin for everything. He became a good 
golfer. 

JJ : He had the tribal marks. 

Jungers: He had the tribal marks of a Sudanese. A big, burly, powerful 

guy, who was a very good leader and a very good carpenter and got 
his citizenship somehow--! don't know how he did it. 

Hicke: As a Saudi? 

Jungers: As a Saudi. So we sent him to some schools and trained him and 
nobody objected, so I called some of the Saudi foremen in and I 
said, "I want to make Khalil All a foreman." "Good idea!" He 
was black, but no problem because he had no social stigma. 

Hicke: Did it work? 

Jungers: Khalil? 

Hicke: No, the first one. 



43 



Jungers: No, I didn't make him foreman, I never made him foreman. He was 
known as from the wrong family. But Khalil, who was also black, 
they had no problem with. So again I became convinced that it 
was not a black problem. 

Hicke: The caste was the problem. 

Jungers: It wasn't really a caste. It was just that they came from the 
wrong family, socially, which made them unable to lead. And it 
was in such a way that not even the Saudis could explain why the 
guy was in a bad family and when I said he's black, they said, 
"No, you are wrong. That's not it." I said, "Tell me what it 
is." "Well, he's just the wrong family, that's all. Don't you 
have bad families in the States? We know you do. We read the 
paper." [laughter] 

Hicke: That's pretty interesting though, because Ibn Saud came from a 
tribe that eventually ruled all of Saudi Arabia. 

Jungers: That's right. 

Hicke: So these other tribes that didn't rule, were they bad families 
too? 

Jungers: No, that was a political struggle; but also, blacks didn't occur 
in central Arabia originally. They only occurred on the coast. 
The Persian Gulf, where the Portuguese came and where there were 
old Portuguese forts and ruins of them, this is where the blacks 
came from. They came from slaving, and they also came from the 
Omanis, who were the greatest slavers in the world. You've got 
to get back to that. 

In the West, in Jeddah, there are many oriental Saudi Arabs 
and they came from the Indonesian and other oriental Muslims 
going to Mecca for the pilgrimage. This occurred over centuries 
and is not necessarily a recent occurrence. 



Handpicking Leaders 



Jungers: Back to the work force. When you were in Arabia, Julie, you met 
Saleh [Gubgub] an-Najrani. He and Khalil came over to see us one 
night. Saleh an-Najrani was a kid from Najran, which is in the 
southwest corner of Arabia, a mountainous area. The Najrani 
Arabs are tough people: hard-working, God-fearing people who are 
absolutely fearless when disturbed. They look you in the eye, 
they tell you what they think, and they don't give a damn what 



44 



you think if it comes to that. The rest of the Saudis kind of 
hold them in awe and say they are too tough . 

Well, Saleh was a skinny kid, and I was walking down the 
road one day with the labor foreman. That was in the 1950s; the 
foreman was an American. There were a hundred guys or so digging 
the ditches before we had much earth-moving equipment; we just 
put a hundred men in a ditch and would get it dug quickly. There 
was one kid in there just working to beat hell and yelling at the 
others, "Come over here! Let's get going!" And sand was coming 
in on them and they were working and it was hot and this kid was 
just working and urging everyone on. I said, "Who's that guy?" 

He says, "I've never seen him before. He must have shown up 
this morning when we were hiring. I never saw this guy." 

I said, "That looks like someone I would make a kind of a 
head man out of." 

He said, "Yes, it does to me, too." And so he did. He 
turned out to be one hell of a leader. 

Hicke: This is Saleh? 

Jungers: Saleh an-Najrani. His full name is Saleh Gubgub. He was 

completely uneducated. We sent him to school, finally, and sent 
him to the States to school at Dunwoody Institute, a school for 
craft supervisors. Saleh was a free spirit. He hated school and 
he wasn't about to go to formal schooling. "Saleh, if you don't 
pass that math course, we're going to can your ass!" 

"Frank," he'd look me in the eye, "I'll pass the math 
course, okay?" But he wouldn't go to the next one, you know? 
[laughter] That's the way he was, but yet he saw things so 
clearly people followed him. We picked guys like that. 

Hicke: He was a leader? 

Jungers: A leader. "Put him on the list." 

"But he doesn't want to go to school." 

"Make him go to school . " 

"Okay. Here you go." [laughter] 

Hicke: So that's how you turned such a recalcitrant work force into a-- 
Jungers: Yes. Nothing happened overnight, but what did happen and what 



45 



the Cy Hardys and the Tom Bargers taught me was , you have to show 
them that you are Interested, that you are trying to do 
something, and mean it. "Are you getting much done?" "No, not 
very much, but we are trying and we have a program and it is 
working." If you want to get with it, okay; if you don't, stay 
where you are and bitch. And that was it. 

Hicke : How long did it take you to totally phase out the rest of the 
foreigners? 

Jungers: It didn't take long to set and implement a clear policy. It was 
so obvious. And we just couldn't build on Italians and Indians 
and Pakistanis. They were so foreign to this whole system. It 
had to be Arab-American if it was going to last. Were there some 
great injustices to these people? Yes. We paid them. We paid 
them well and they left. I made an Arab foreman in- -we had an 
engine rebuild shop. He comes in one morning and he says, "The 
Pakistanis are all on strike!" 

"How many are on strike?" 

"Three hundred." And he's the foreman. 

I said, "What are you doing about it?" His name was 
Ma'azin. 

He said, "There's nothing I can do." 
I said, "They are not working?" 

He said, "They are not working, Mr. Frank, and I can't do 
anything. " 

I said, "Okay, you go back and you get them out in the yard 
and line them up. All of them." So I got personnel people and 
went out. I said to the first guy in line, "You're not working 
today?" 

"No sir." 

"Okay, you either go to work or to Pakistan. Which is it?" 

"I'm not working." 

"You go to Pakistan." The next guy, "What about you? You 
working?" 

"No." 



46 



"Pakistan." Next guy. And as we moved down the line a few 
of them began to cave in. Eventually, those who had refused 
wanted to change their minds saying, "We'll work." 

"No, you won't. You're out." We just couldn't tolerate 
this; we couldn't let them contaminate the Arab work force. 
Unjust? Yes, it was unjust to the Pakis. They had a grievance. 
It wasn't a big grievance but they thought they had enough power 
to hold it. Had they been Arabs would I have treated them that 
way? Maybe not, but I thought- -well, we are either going to get 
the foreign work force straightened out or we risk losing control 
and leaving ourselves. The Arab blue -collar work force in 
Aramco--and there isn't a country in the Arab peninsula that 
won't say it --is a very good work force, very good. They are 
hard working, they follow the principles they have been taught, 
they try to do a good job. They are good people. They are a 
better work force than much of the American work force in this 
country. 

Hicke: From what I have read and heard of, a lot of other multinational 
companies have taken a leaf out of your book now. 

Jungers: I'm glad to hear it, because that's really what happened. It 
spans a few years , but it is the one thing I am as proud of as 
anything I have done. And in Saudi Arabia I'm remembered for it. 
But I didn't do it just because I liked Arabs. Yes, I liked 
them, but we pushed the preferential use of local people because 
we had to do it and it was the right thing to do to utilize 
indigenous people who are unemployed and capable in preference to 
foreigners . 

Hicke: They called you Mr. Frank? 

Jungers: [laughter] Yes, a lot of them called me Frank. Or they just 
called me Jungers. Some of them called me Jun-gerr. One day, 
since I left Arabia, I was in Houston. We have a subsidiary 
company there and I had been gone from Aramco for a long time, 
and there are a lot of Arabs now working in Houston, young kids, 
engineers, educated young men. The president of Aramco Services 
Co. in Houston now, Hamad Jaraifani, was an ex-refinery manager 
whom I had known for many years. We met in his office and Hamad 
said, "I'll invite some people and please join us for lunch." So 
he got about fifteen employees, mostly Arabs. I hadn't met many 
of the Saudis who were young engineers except Hamad. Shafiq 
Kombargi , now a vice president of Aramco Services, was there. 
They all sat down, and after chatting a bit one young Saudi said, 
"I'm very glad to meet you, Mr. Frank. I want to tell you a 
funny story." 



47 



Hicke: 
Jungers 



I said, "Oh? Okay." 

He said, "My father one time worked for you." And he told 
me who he was and I vaguely remembered his father. He said, "One 
time I came home to him and told him, 'I'm tired of working for 
Aramco. I'm not going to do this and I'm not going to do that 
and so on, whatever it was,' and my father said, 'Who do you 
think you are? Jungers? You are going to do what you are 
supposed to do. You are supposed to work, you are going to 
finish your training and education. You can't talk like that!'" 

They were all laughing. Apparently, "Who do you think you 
are, Jungers?" had become synonymous with an expression of the 
Aramco work ethic and it was humorous to think one could somehow 
escape this ethic. 

Okay. That's a good enough place to stop for today. 
Yes. 



[Interview 2: August 16, 1992 ] 
Hicke: I would like to ask you to tell me that story about Tom Barger. 

Jungers: Okay. This really belongs back with some of our previous 

discussion about Barger and Cy Hardy and their sensitivity to the 
Arabs and knowledge of the Arabs. Barger told a story at times 
that really says a lot about Arab thought and the pragmatism of 
the desert Arab in particular. 

Tom was telling of the time when he was still a geologist- - 
this had to be in the '30s --and the company had brought in an 
airplane, which I believe was the Ford Tri -Motor. It was in 
boxes and was brought ashore on the beach and assembled. When it 
was ready for flight, Barger had invited the Bedouin of the area 
and the leaders of the Bedouin to witness this event. As this 
plane took off in a flurry of sand, Barger remarked to one of the 
Bedouin chieftains, "Isn't it amazing that a machine of this size 
can fly?" To which the Bedouin replied, "Isn't it supposed to?" 
and of course he had never before seen an airplane . 

I think this says a lot. 

Hicke: I didn't realize it was that early. 
Jungers: Yes, it was. 



48 



Developing Education for Children in Dhahran 



Hicke: Let's skip forward, then, to Dhahran. You had just moved there 
when we last talked and I wondered if you could tell me a little 
bit about what state that city- -would you call it a city? --was 
in. 

Jungers: Well, it was a town, a compound. We had a large American family 
housing development there of probably 3,000 families or so. And, 
of course, also a large development for bachelor Arabs who came 
from the villages and stayed and worked and went home on 
weekends, and also similar quarters for other non-Americans, 
mostly white-collar, who worked in the administrative offices: 
Pakistanis, Indians, and so on. In this kind of community, of 
course, all of the recreation facilities were provided: feeding 
facilities for the various nationalities, schools for the 
children of families housed these. We had similar compounds at 
Ras Tanura and Abqaiq, but of course Dhahran was bigger. We had 
schools through the ninth grade for primarily American children 
but also for any other foreigners and Saudis who had reached a 
level that merited family housing. This family housing was 
initially built to house Americans but was also made available to 
Saudis as they advanced into the same level jobs as Americans. 

Hicke: Because they had to speak English? 

Jungers: The children had to speak English if they wanted to attend the 
schools and compounds. It was an American-oriented education, 
because American children had to be prepared for prep school 
entrance. Of course, this became a bone of contention- -a problem 
for the Saudis- -because they began to realize that their children 
were missing a lot of their culture. There was agitation for 
Arabic instruction for them, which we provided for a while, but 
it was more than just Arabic that they were missing, and the 
schools in their communities weren't of a caliber to handle their 
needs, either. This wasn't resolved for quite a few years. 
Maybe we could jump ahead and describe the problem? 

Hicke: Okay. 

Jungers: Like so many things, there were new approaches required, and some 
of them we learned on our trip to the other oil companies; some 
we devised ourselves. I say 'we'; I was not in a decision-making 
capacity then, but I was a witness and maybe had some input. But 
people like Barger were in the policy-making position at the 
time. In the case of the schools in the early '50s, we realized 
that the schools for the children of Aramco Saudi employees, in 
their communities, were simply either nonexistent or totally 



49 



Hicke: 
Jungers : 



inadequate . What schools there were , were only for boys . We 
also realized that housing these people as bachelors was not the 
right thing for a family-oriented society in particular, and to 
drive them home over many, many miles on weekends only to turn 
around and come back couldn't be the long term answer. 

So a home ownership program was developed whereby Aramco-- 
which had surface rights, at one time, to nearly half of the 
peninsula- -donated land to and put in housing developments in 
various local towns- -subdivided into lots, put water and sewer 
and streets- -and then loaned the employees the money to build 
their homes. The loans were interest-free, and forgave 20 
percent as they were paid off through salary deductions. This 
was economically a better deal for the company than taking care 
of people by building and renting housing to them as an 
alternative. The alternative had been tried in a number of areas 
other than Saudi Arabia, and it was a disaster, because you 
became the hated landlord and the system was inadequate. Of 
course people don't take care of rental houses, and then if they 
retired, you either ended up with communities of non-employees or 
were forced to evict non-employees. And their family structure 
was different than ours. Their family consisted of their parents 
and in-laws and a wider group of relatives of all sorts. Their 
definition of families was much different than that of westerners 
and Americans . And so our concept of what should be adequate 
housing for them was completely wrong. And I say 'we' , I mean 
the oil companies all over the world, really. 

So our home ownership program- -which sounded like a big 
give-away- -really was, when you added it up, a lot cheaper than 
trying to rent them housing. They built what they wanted. We 
even supplied them the engineering, helped them locate materials 
and select qualified contractors. They built their own homes 
many times in developments closer to the work sites than the 
villages that they came from and moved into these communities 
that were created by the Aramco loans and home ownership program. 
It was a very successful program. 

As the developments grew, they needed schools, and the 
schools that were in nearby towns were inadequate anyway. 

The Arabic ones? 

The Arabic schools. And so Aramco built and operated a few 
schools in the beginning, which were called schools for the sons 
of employees. Early on, the government agreed to staff those 
schools, with Aramco 's help. Aramco paid for the schools, and 
they became models for the Kingdom. With all of the problems 
that developed in moving those schools forward, nonetheless they 



50 



were the models. I don't recall how many schools we actually 
built, but there were many, finally, in all of the communities 
the Aramco employees lived in any number. 

Even with the problems, the employees really understood what 
had happened and how useful these were. Of course, the outside 
public would clamor to get into them, and we tried to reserve 
them for our people. This caused the government to expand the 
programs to include everyone, and the government eventually 
incorporated Aramco schools into the national system. 

But back to the Aramco community- - 

Hicke: If you are going to move away from schools, I have one more 

question. Did the Aramco employees early on teach at the schools 
part time? 

Jungers: Yes, we did. We had teachers. We had a large teaching staff, 
not only for schools, but also for training programs. Many of 
the staff initially were English-speaking, because the Arab 
employees needed to learn English anyway, and so these training 
schools were mostly conducted in English. We did have a large 
training department, which provided teachers for our training 
schools, for the American schools in our compounds, as well as 
Arab teachers for the schools for the sons of the Saudi employees 
until the government could staff them. It was a cooperative 
effort. The effort was later expanded at the request of the 
government to the first girls' schools in the Kingdom. 

So the school problem became one then of, "If you want to 
move outside into your community, we'll help you with your 
housing and you can put your children into the schools. If you 
have a high-enough level job and you want to live in [what was 
then called] the senior staff compound, that's fine. You can 
then send your children to the schools that are designed for the 
needs of English-speaking Americans." Well, some did for a while 
choose the compound living, but gradually all but the highest 
level Saudi executives moved out. Especially as the quality of 
the government Arabic schools improved. 

Later on even those executives who remained became more and 
more unhappy with having to send their children to just American 
schools, even though it prepared them well for going onward to 
college in the United States, which some did rather than going to 
Europe. The American school lacked a good education in the 
Arabic language as well as missing cultural reinforcement that 
could only be gained by attending Arabic schools with other Arab 
children. Later on also, good universities such as the College 
of Petroleum and Minerals developed in the Kingdom. 



51 



Thus, after I became head of the company, we designed a 
program where Aramco developed a housing area for executive home 
ownership on land adjacent to Dhahran. They built true executive 
housing there, and there had the option to handle their own 
education or continue bring their children to the American school 
if they wanted. They were close either way, and they had a much 
better choice. That's the system that exists today, and most of 
the Arabs have moved out of American company housing and built 
housing of their own while taking advantage of the Aramco home 
ownership system. It's much more in keeping with their current 
status in life, too, to live in a housing development with other 
executives and yet close to work and other amenities. 



Building Medical Facilities 



Hicke: I interrupted you when you were going back to Dhahran to tell me 
about other parts of it. 

Jungers: Well, living in Dhahran were various nationalities. In addition, 
to the schools , there was the huge medical center for the 
employees; we had outlying clinics and a big medical complex. 
Again, we provided medical care for all employees and their 
families, and again, the family members of Saudi employees were 
many, since the definition of the family was much larger and 
extended. There were many estimates as to the size of the 
population that we provided service to, but it was well over 
250,000 people. So we had the premier model medical center for 
the country with full USA accreditation. It too became the model 
for future medical facility development in the Kingdom, and the 
government gradually built hospitals that had greater 
specialization capabilities than those of Aramco. 

But the medical, as in education, posed many social 
questions. For example, our medical center included dentists and 
dental facilities. We had twenty or twenty- five dentists. Well, 
many of the questions that were posed were posed by our medical 
people. They wanted to, and felt obligated to, provide the same 
kind of medical care for the low- level employee as they did for 
an American or a high-level Arab. This posed questions that we 
had never had to face in the United States, although maybe we 
should have, such as what level of care does which level of 
people receive? 

I'm not talking here about life -sustaining care, everyone 
got the same care on that basis, but dental care, for example. 
We had employees who had never seen a dentist, and they really 



52 



came to a dentist only when they had a bad toothache and a 
swollen mouth. Now the question is, do you give the employee 
tremendously elaborate care to try to save a tooth or do you just 
pull the tooth? If we planned cosmetic and elaborate care, we 
surely didn't have enough dentists. So the dentists developed 
technicians who were Arab, and when the employee came in, say 
with an abscessed tooth, the dentist took a look at it and 
decided this was a tooth that should be pulled and the technician 
pulled it. The guy walked out, and in a few days he felt better, 
and as far as he was concerned, dentistry was a wonderful thing. 

This was not the kind of dentistry you required in America, 
but the British would accept less than Americans. Americans 
needed things likewhat do you call straightening teeth? 

Hicke: Orthodontia? 

Jungers: Orthodontia. Americans demanded it; we had to supply it or give 
them a chance to get it done in the States. But you surely 
weren't going to give all nationalities of other employees 
orthodontia. So this question was always in front of us: just 
how much did the lower- level Arabs and other nationalities 
require and demand? How much did they truly want? This was a 
moving target that kept moving up. We had to decide, even on 
emergency care, if it was a complicated surgery, would we do it 
there or would we simply put them on an airplane and send them 
back to the States? So medical care was a big problem. 

Hicke: How did you resolve it? 

Jungers: Well, we just moved with the tide. 

Hicke: Continual reassessment? 

Jungers: Continual reassessment, continual changes in the level of care 
that we gave people . 

Hicke: Did the company have some kind of medical insurance that would 
help pay for cases that had to be sent to the States? 

Jungers: No. We self insured and you justified it by saying, "Well, we 
are either going to pay it or we are going to have to employ a 
brain surgeon here and all that goes with it, so let's decide. 
Or we'll have to have a cancer center." We didn't have a cancer 
center, but we had some very good surgeons and very good people 
who said, "This patient has bad cancer and we'd better get him 
back to the Mayo Clinic or someplace." That's really what 
happens here; your doctor doesn't take care of everything. So we 
didn't have all of the specialties. 



53 



Hicke: 
Jungers 



Hicke: It reminds me of this health care plan that Oregon has proposed 

where they will give prioritized services. Where do you draw the 
line? 

Jungers: It's a big problem. I am on the board of trustees of an Oregon 
Health Sciences University Foundation. 

Hicke: Are you making any progress with that? 

Jungers: I don't think it's going to fly. I mean, it's the sensible thing 
to do, but how am I going to convince you that you shouldn't get 
the same level of treatment that I get? That's inevitably what 
it's going to boil down to, and our society is not prepared to 
face that kind of a question head-on. 

Well, maybe it's there in the wings. 

It is, and it must happen. And again, I think where the line 
finally has to be drawn is, "Is it life-threatening?" If so, then 
we all ought to get the same type of care, but if it is cosmetic, 
if it is a matter of improved comfort sooner, well that's fine if 
you can afford it. 

Hicke: And those are the kinds of choices that you made in Aramco? 
Jungers: Yes, we had to make them. 

And of course the medical care for women posed a tremendous 
problem. The Arab women were out in the villages, and they 
couldn't travel alone- -didn' t know how to travel alone. So the 
employee had to take time off to go home when he heard about an 
illness- -there were no telephones in the early days- -and get the 
family and bring them into the hospital, try to get the women 
taken care of, and take them back home. We lost a lot of 
employee time doing this. And it was a tremendous burden on the 
employee once he realized that a sick mother could be taken care 
of if he took her to the hospital. He didn't have a hospital 
before, so he didn't have the problem. [laughter] So then we 
devised a series of rather low- level clinics in the villages, 
where the family could come without calling the employee. These 
clinics, staffed with competent nurses, took care of the colds 
and the runny noses and the shots and the usual kinds of things, 
and pregnancies. And when the woman really was about to deliver, 
either get the husband to take her in, or if somehow we could 
talk her into coming in an ambulance, all the better. We just 
tried to move in the direction of providing good care and 
minimizing work force disruption. 



54 



Schooling Girls and Women in Saudi Arabia 



Jungers: This was a big social upheaval again that Aramco had to deal 

with, girls' schools. We built the first schools for daughters 
of employees- -the first girls' schools in the country. Here 
again the western public thinks in terms of the Saudis or the 
Arabs not wanting to educate girls. To some extent that was 
true, but finally when the government began to build girls' 
schools in the various cities in the country, they were not well- 
received in many outlying areas. 

Hicke: By the government? 
Jungers: No, by the people. 

Hicke: Oh, by the people? Oh, this is when the government started 
building them? 

Jungers: Yes. And many of those girls' schools, such as in Abha, were 
opened with troops, and people were dispersed and told to send 
their kids to schools- -girls to separate schools to be sure, 
but-- 



Hicke: So it was a requirement? 

Jungers: Well, this had to happen, because it was such a social stigma to 
have girls going out into public this way. The government didn't 
control these things, the father didn't control these things, the 
society did. 

Hicke: The culmination of that is that what Julie was telling me last 
night? 

Jungers : Yes . 

Hicke: That women are now educated and perhaps overeducated because they 
don't really have any jobs to do; so their families just send 
them back to school for doctorates. 

Jungers: Hoping that maybe something will happen. [laughter] Like they 
will find a rich husband or something. Maybe it will all go 
away. 



55 



Hiring Arab Women to Work at Aramco 



Jungers: And we hired women early on. 
Hicke: Oh, did you? 

Jungers: A lot of it sub rosa, as far as the community was concerned, for 
many jobs. We needed women in the hospital that could speak 
Arabic, that were Arab, that could talk with a woman who was 
having a physical problem and to convince her that this male 
doctor had to examine her. The alternative was to have her 
husband or son present, but he was not likely able to do an 
adequate translation job between her and the doctor. So we had 
jobs like this that required semi-educated women. We had certain 
clerical jobs that they did. The girls would come in and try to 
get a job once they had been outside to school, and then go home 
and say, "Aramco will give me a job, will you let me go to work?" 
and the father would often say no. He may have been an employee 
and he believed that she ought to work, but it was a stigma for 
him to send a daughter out into the public which consisted mostly 
of males. 

Hicke: It was disparaging to his ability to take care of his family. 

Jungers: Yes. Why would he allow a daughter to do this terrible thing? 

"Is it because you need money?" This is how the community looked 
at it. 

Hicke: Right. Yes. "You can't take care of your family." 

Jungers: "You can't take care of your family so you have got to send her 
to a brothel?" That's literally the way they'd put it to him. 

Hicke: But there were a few brave souls that-- 

Jungers : Yes there were, and there were a few headstrong daughters and so 
the father would bring them in to work and take them home at 
night. We made arrangements where they ate by themselves at 
lunch and so on and didn't associate with males- -or at least the 
father could say that. [laughter] He couldn't control whether 
they wandered around the compound or not. 

Hicke: These were the times when the father trusted the Aramco community 
and could maintain to his society the daughter was adequately 
supervised. 

Jungers: Yes, and I knew some of those girls before they were married; now 



56 



two or three I can think of are married to high-level Saudis, 
some of them on the board. I am very well acquainted with these 
women from the days when they were employed as young girls. 
Julie met some of them. 

Hicke: Just as an aside, it strikes me that you mentioned somewhere 
along the line that you also had some English and Dutch women 
working as secretaries. 

Jungers: That's right. As secretaries. 

Hicke : How did that happen? 

Jungers: Well, we used American secretaries initially. 



Hicke: You were saying that you were the only employer of women at this 
point. 

Jungers: Yes, in the Kingdom at that point, by special agreement with the 
government. Of course, as time went on, we tried to make 
secretaries out of male Indians and so on. That worked in some 
instances, but they really weren't capable of high-level 
secretarial or administrative work. We had major offices in 
Holland, and so we began to bring in Dutch women and British 
women to try to fill these secretarial jobs. Of course, they 
really didn't fit socially either, because there were very few 
Dutch and English single men in the community. So they were kind 
of looked upon strangely by the Arabs, initially at least. Arabs 
had learned to accept the strange ways of Americans, but-- 

Hicke: These other women entered, perhaps, through your headquarters 
offices and then were moved to Saudi Arabia, is that what 
happened? 

Jungers: Yes, or were hired directly. Of course, they didn't work out 

very well in the early days with the American executives and for 
that matter the Saudi executives either, because they had 
different work and social standards than Americans. 

Hicke: They were all English-speaking? 

Jungers: Yes. 

Hicke: They had English skills and some kind of secretarial skills? 

Jungers: Oh yes, they had those, but they didn't have the social skills. 



57 



Hicke: Were there any difficulties with the Saudis in terms of American 
or other foreign women working for Aramco? 

Jungers: As I mentioned earlier, Aramco had special permission to have and 
use single women in cases of recognized need, such as nurses, 
teachers, confidential secretaries, x-ray technicians, et cetera, 
always with the general understanding that they would be replaced 
by Saudis (male) whenever possible. Even today it is impossible 
for an unattached foreign female to enter the country unless she 
is directly sponsored and justified by a recognized organization, 
usually Aramco or a governmental organization. I believe it is 
still impossible for a Saudi to marry and bring in a foreign 
woman without specific approval of the King's office. 



Building an American Community in an Arab Society: Other 
Difficulties 



Hicke: Well, let's see. We are still on Dhahran. 

Jungers: Okay. So we had schools and hospitals. We even had a 

centralized undertaking service. Of course there was no such 
thing in Saudi Arabia. The desert Arabs bury their dead at 
sundown on the day they die, so they don't need to be embalmed. 
We did have a cemetery of our own, but most dead foreigners were 
sent back home. To ship a corpse internationally means you've 
got to meet a lot of standards. You must have the right papers 
to get him back into the country he came from, you've got to have 
the right kind of casket, which must be completely sealed and put 
into a metal box. It was an unbelievably time-consuming problem. 
So we had to have an undertaker- -more than one. 

Hicke: This was something that the military certainly had experience 
with. Was there any connection? Did you get help from them? 

Jungers: The military [community] that we had at the base near Dhahran 
wasn't very big. They used our undertaking facilities, I 
imagine. I don't know. 

Hicke: You did have some military advisors? 

Jungers: No, there was just a military base near Dhahran. 

Hicke: An air force base? 

Jungers: Yes. And like all American air force bases, it was finally 
phased out by the government. Middle East countries, 



58 



politically, could not tolerate having what appeared to be an 
occupation force. That air base became the commercial 
international airport for the eastern side of the Kingdom; it 
still is. 

Hicke: Was there much interaction between the company and the military 
base? 

Jungers: Not really. 

Hicke: I would have thought their facilities would be perhaps available 
for employees. 

Jungers: They were inadequate for our own families, although our families 
like to go to the officers' club for dinner if they arranged for 
privileges. They on the other hand wanted access to many of our 
facilities, which was impossible, because it meant giving access 
to the surrounding Arab public. Now that posed another whole 
series of questions and problems. Movie theaters- -we had the 
only movie theaters in the country (still do) . There are no 
movies. In fundamental Muslim society, movies are forbidden. 

Muslims don't eat pork. We had special dispensations that 
were really not dispensations, they were agreements between 
Barger and the King- -and later I even had to renew some of these 
dispensations. Top management and the local police or provincial 
government had numerous sort of unwritten, "unagreed" agreements 
that said, in the case of pork, "If you import pork, it will come 
through customs as meat. You sell it in your store only to non- 
Muslims and you certify each sale as not having been made to 
anyone other than Christian Aramco employees." 

Hicke: Did it work all right? 
Jungers: Yes. People wanted bacon. 
Hicke: Oh, bacon. 

Jungers: [laughter] And we know that oil field workers have bacon and 

eggs, ham and eggs, and of course there were foreigners working 
for contractors and so on, and they wanted pork; they would try 
to get in and the air force people would try to get in. And the 
answer was no. We couldn't. It would mean that we would lose 
these rights ourselves. And so we had to keep them out. Movies, 
the same thing. We had movies. Religious services: there were 
no religious services allowed. No churches allowed. Barger was 
a staunch Catholic, he and his wife. He made a deal with the 
king and we were allowed to import "special teachers." These 
special teachers were priests and Protestant ministers that never 



59 



wore a collar or anything but civilian clothes, and they 
conducted services on Fridays --not Sundays -- 

Hicke: Which was the Muslim- - 

Jungers: --the Muslim holy day- -in our theater. "Well, could the 

consulate staff come to church?" "What church? There is no 
church." "Well, we heard you got--" "Well, you heard wrong." 
[laughter] Everybody knew. 

Hicke: All of this? 



Catholic-Muslim Mission: Christianity and Islamic Cultural 
Differences 



Jungers: I have a good story to tell about churches. 

Hicke: Do you want to tell it later or do you want to tell it now? 

Jungers: I'll do it now. Much, much later, when I was either in 

negotiating or- -let's see, what job was I in? In my negotiating 
job or president or chairman, I don't now know which. I think it 
was probably chairman. 

For years a couple of priests had been coming into the 
Kingdom really because they were friends of Barger and some other 
members of the Catholic community, and then they kept coming 
after Barger left. One of them, Father Gene Watrin, was a 
missionary, a Jesuit missionary. And I'm not singling out 
Catholics; there were others. The Protestant communities could 
bring in special people from time to time that I am now aware of, 
but I was closer to these two men- -the other being Monsignor John 
Nolan. Father Watrin would come to Saudi Arabia, and he was a 
friend of many Aramcons and became a friend of mine . He also 
came because the Aramco community was a source of donations. He 
is a fine man and he is a missionary in Kathmandu, which is many 
miles away from Arabia. 

Father Gene Watrin was still in Kathmandu when my son Gary 
decided to get married- -he was born in Arabia and he married a 
girl, Mariellen Eschezuria, a Ras Tanura refinery employee's 
daughter who was also born in Arabia and his wife-to-be, in 
particular, wanted to be married by Father Watrin. So they tried 
to get Father Watrin to come over and marry them. He didn't have 
the time, and so everyone went to Kathmandu for the wedding, 
[laughter] This was after I had retired. Gary was working there 



60 



then as an Aramco employee . 
Hicke: What did you do, charter an airplane? 

Jungers: No, they all went commercial. Some of us came from the United 
States, and we all stayed at the Yak and Yeti hotel. [laughter] 
Father Watrin is a fine missionary, absolutely revered in Nepal, 
and everything you give him goes right to the people; he lives 
like a pauper. Those who know him would consider him to be close 
to a male Mother Theresa- -at least he's bordering on it. 

Back to my real story. The other priest was Monsignor John 
Nolan, who was head of the apostolic mission to the United 
States, also was head of the Middle East Foundation, which was a 
Catholic foundation run to manage Catholic charities in places 
like Jerusalem. It existed there during the Israeli occupation 
(before and during) and still does. It functions wonderfully 
there in spite of the Israelis' determination to shut down some 
of the operations. John Nolan used to come to Arabia also. He 
and Barger were friends and he and I became good friends. He was 
a great friend of John Kelberer, who succeeded me, and of many 
other people in Aramco. He is a very, very personable Irish 
priest who lived in New York at the New York Athletic Club. 

We had talked many times about things that might be done to 
help the Middle East situation, especially the plight of the 
Palestinian Arabs. At one time, we had the idea that maybe we 
could kind of soften the Saudi approach; get the Arabs to feel a 
little differently towards Christianity, and put pressure on the 
Israelis to recognize the Palestinian problem and to open 
Jerusalem to all three great religions. At the same time it 
might cause the Saudis and other Arabs to realize that Americans 
were not biased toward the Jews. So I went to see the king and 
suggested that. No, I did not go to see the king, I went to see 
the head of protocol and suggested that-- 

Hicke: Do you remember his name? 
Jungers: Yes, Ahmad Abdul -Wahab. 

--and suggested that I thought that it would be possible to 
begin a program that might lead to establishment of relations 
with the Vatican, realizing how sensitive this was. But perhaps 
the Vatican would respond if we could get the Saudis to respond, 
maybe we could start a dialogue. Monsignor Nolan was well 
connected in the Vatican because he headed the Catholic Middle 
East Foundation and also had some duties in which he directly 
reported to the Vatican. 



61 



So, much time went by, while Nolan worked with the Vatican, 
and I discussed it through the appropriate Saudis. I finally got 
word that they might consider a low-level visit. 

Hicke: The Saudis? 

Jungers: [Nods affirmative] So we arranged this visit, and it consisted 
of a cardinal, very well connected in the hierarchy that dealt 
with foreign affairs, and Monsignor John Nolan. It was 
considered as an official visit to the Kingdom. They would be 
hosted by the Minister of Justice, who was very religious and 
came from a very religious tribe. They would be guests of the 
Minister of Justice. They arrived, complete with their cassocks, 
hats, and the whole bit, and they were received at the airport. 
This was unprecedented in Riyadh. [laughs] Later they walked 
around Riyadh and people would stop them and say, "Where are you 
guys from?" 

"We're from Rome." 
"Really?" 

"Yes, really." Everybody was very--. They are religious. 
The point of the story is, contrary to how they are depicted, the 
Arabs like most Muslims, are very respectful of other people's 
religious beliefs. But anyway, they were there. But even more 
strange, they had flown in that night on Saudi Airlines, and when 
they landed in Riyadh, the cardinal's bag had been lost, and it 
included his equipment for prayer and saying Mass. Nolan told 
the Minister of Justice that this had happened, and he told the 
king, and I was told by the king's secretary that the king had 
become extremely angry. This was toward evening, and he ordered 
that Saudi Airlines, which was government owned, be told that 
that bag had better be in Riyadh early tomorrow morning. There 
were no excuses allowed. [laughter] 

Hicke: There are times when the king is a big help. 

Jungers: He was, the king, and everybody knew that. And the bag indeed 
arrived during the night. John Nolan never did know how it got 
there . 

Hicke: Some people stayed up all night hunting, probably. 

Jungers: And planes probably ran out to get it. [laughter] I don't know 
where it was, but it showed up. 

So anyway, this mission occurred, they were treated with 
extreme cordiality and, in turn, a similar mission went to the 



62 



Vatican and it too was a high-level mission. This was the 
beginning of potential relations. The timing of this story needs 
to be checked. There was only one other American in Aramco that 
knew of this at the time, and he could probably verify the timing 
of it. 

Hicke: Who's that? 

Jungers: His name was Majed Elass, who was of Syrian birth but an American 
citizen, an advisor to me , a director of Aramco at the time. But 
this was secret enough that not even the Aramco board of 
directors knew it. But I think that last mission to the Vatican 
occurred a few months prior to King Faisal's death, and the whole 
effort withered. 

Hicke: That was the end of that? 

Jungers: That was the end of that whole idea. One of the points of this 
story, though, is that Muslims are not like Christians in many 
ways, and also Muslims are extremely tolerant of all other 
religions, including Judaism. As a matter of fact, enclaves of 
Christians and Jews and Hindus and Buddhists have continuously 
lived in the Middle East since the beginning of Islam. 

Hicke: I think I have read that when they conquered territory they 
didn't require conversion. 

Jungers: No, no. And for that matter, today a large community of Jews 

lives in Baghdad and a large community of Jews lives in Beirut. 
This is contrary to what we have been led to believe by our 
press. So the idea of other religions and the idea of an enclave 
living inside a Muslim community is not foreign, and that's one 
reason why an American enclave in Arabia posed little basic 
problem for the Saudi people. It had been part of their cultural 
makeup. And it goes back to the basics of Islam, the difference 
between Islamic thought and Christian thought, let's say. 
Christians are taught to go forth and preach the gospel and 
convert everybody. That's been our background. 

Hicke: No one who was not Christian will be saved. 

Jungers: That's right, you are doomed to hellfire. The Muslim version of 
this is, "You are not a Muslim? You are a poor, unfortunate 
person. I really feel sorry for you. There is no way that I can 
really help you, and no way that you can hurt me, so by all means 
live where you want to live." And that is basic to the thinking 
of Muslims- -they are confident in their faith and don't feel 
compelled to enforce or prove it to the others. The Quoran is 
not far different from the Bible. After you become used to the 



63 



Hicke: 



Jungers : 



Hicke: 
Jungers : 



Hicke: 
Jungers ; 



Hicke: 



Jungers : 



idea that in the Quoran Jesus is not God but merely was a prophet 
and a prophet probably of less stature that Muhammad- -that , of 
course, is a big difference. But after you get over that 
difference, the rest of the Quoran is very, very similar to the 
Bible, all of the passages and so on- -not all, but most of them. 
The differences are very small. But the Islamic practice is one 
of not having to convert people. 

But they are, as you have pointed out in several instances, very 
protective of their laws, for instance against pork. Is that 
because they are afraid of contamination? 

Sure. This, of course, was written into the Quoran much later 
than the Bible --the Bible preceded it by hundreds of years. This 
was written into the Quoran in a much more modern society than 
the societies that existed at the times the Bible was written. 
Pork no doubt was recognized as often being contaminated meat. 
And Judaism went the same way. Many of those laws, while they 
became part of the religion, really had their basis in 
cleanliness and trying to keep people healthy. These were 
dangers and therefore the religion- -there was nothing else 
written- -and so the religion wrote that you shouldn't do these 
things. And it became a matter, then, of religion. 

But they didn't want the Americans to eat pork either. 

It wasn't that. They let the Americans do it, but they didn't 
want to officially acknowledge that you can get by by not 
following the Quoran. This was the basis of law of the land, and 
so you couldn't. You couldn't say, "Some of you follow the law 
and some don't." This is a mixture of church and state. 

So now it has become a political rule or law? 

Well, the law is Quoranic law. So in that sense, church and 
state have become intertwined. In America, we have gone to great 
lengths to keep them apart. I'm not sure that's a good idea; we 
haven't produced very much good as a result of it. In Saudi 
Arabia, all people are Muslim, they all believe, and those 
believers cannot possibly believe that other people should be 
able to eat pork. I mean, it just doesn't follow. 



I see that, 
state? 



The laws of the church have become the laws of the 



They are the law of the state. Shari'ah law, which is law that 
is based upon the Quoran, is the law of the land. The judges 
practice Shari'ah law, and it's a harsh but good judicial system; 
justice prevails. 



64 



Hicke: I think that's one reason why the [Onassis] arbitration came out 
as it did. 

Jungers: That's right. 

So anyway, that got us off the subject, but again it was 
part of the Aramco compound situation, where the company 
intertwined itself in the lives of the people, whether they liked 
it or not. We had drivers' licenses; we had them even for women, 
although they weren't any good outside the compounds, and no one 
would let a woman drive outside the compound; there was no 
judicial system to handle her if she got involved in a car 
accident. My wife had a driver's license, an official one, and 
the Saudis issued it to her. 

Hicke: The Saudis gave her a license? 

Jungers: Yes. And it worked when she had an accident in the community and 
the police had to be called in, and sure enough she had a 
license, so they sort of overlooked the fact that a woman had a 
license. But officially, there was no such thing. Booze the 
same way. For many of these religious/cultural type laws or 
regulations there were no official sanctions, but unofficially, 
the Saudis found ways to allow lower level authorities to, with 
implied approval, arrange for sanctions that could be lived with. 

a 

Hicke: We were just talking about some of the differences between 

American and Saudi cultural conditions. You told me several 
instances of differences. I wonder if each one of these had to 
be negotiated, for instance for drivers' licenses? 

Jungers: Yes they did, initially. They were mostly personal arrangements 
between Aramco of ficials- -Barger did a lot of these personally- - 
and the various levels of the government, sometimes with the 
king, unofficially. It was all part of this idea of an enclave. 
The Saudis were, of course, convinced that the Americans needed 
to stay. 

Hicke: Did the Saudi employees resent some of the American privileges? 

Jungers: No, not really. 

Hicke: So it was amicable on both sides? 

Jungers: Yes, yes it was. 

Hicke: Okay. We are still in Dhahran. Are there other aspects of 



65 



community life that we should talk about? 

Jungers: [long pause] Well, in my job, for example, the things that fell 
under American responsibility were things like road building; we 
built all of our own roads. 

Hicke: These were ongoing projects? 

Jungers: Ongoing. Most of which later were taken over by the government, 
much later. We had our own fleet of airplanes for making shift 
changes, for freight, for executive use, for whatever. For a 
while, we had planes running between the United States and Saudi 
Arabia. In the early days, the first plane over was a DC-4. We 
ran two of them back and forth. Then DC -6s later. Everything 
you can think of, we had a part of. The communication facility 
people were at one time under me in Dhahran. We had our own 
telephone system, our own music radio station, our news broadcast 
came in on teletype --we copied United Press and Reuters and put 
out a little newspaper daily, a news sheet. 

Hicke: Did you get AFN [Armed Forces Network]? 

Jungers: No, it wasn't heard there then. 

Hicke: Any other American broadcasts? 

Jungers: No. 

Hicke: I guess that was in Europe. 

Jungers: We had our own television station. 

Hicke: Really? 

Jungers: Still do. 

Hicke: Videotaped? 

Jungers: Yes, taped programs. 

Everything that needed to happen, we did. We had our own 
marine department, we had our own tugs, we had our own piers -- 
that all was in Ras Tanura. 

Hicke: What about transportation? 

Jungers: Transportation of all kinds. We built the only railroad and it's 
still operating in the country; we built it, set it up, operated 
it, and sold it to the government. 



66 



Hicke: Where was it? 

Jungers: It ran from Dammam port (which we built along with the railroad) 
to Riyadh. It was built in the early '50s. So Aramco did 
everything. 

Hicke: I noticed one of the things in this article [looks at notes]: it 
says you were building a new maintenance shop in Dhahran while 
you were there and the Abqaiq stabilizer. What was that? 

Jungers: Oh, it's a crude oil processing plant. 
Hicke: And the beginning of Tapline. 
Jungers: Yes. It was pumped out of Dhahran. 



The "Think Committee" 



Hicke: Other than dealing with the work force, what were the major 
challenges of your job? 

Jungers: Well, that's what it was. It was the blue -collar work force in 
Dhahran area . 

Hicke: Okay. You were there, at least in that job, until '61, I have. 
But I also have from 1959 to 1961 something called the 'think 
committee' ? 

Jungers: Yes. That was set up by Barger. It was a group of executives, 

mostly middle level, who were known to have thoughts of their own 
and were willing to express them on all of issues of the type 
we've talked about. 

Hicke: Was that the same as the other series of meetings? 

Jungers: It was more formalized. The other one was sort of a social 

exchange, but this was more to critique company policies on any 
subject. And suggest changes. It was used for that purpose, but 
it was also used for management development for those who 
apparently were seen as having the potential advance at high 
levels. You'd wonder at times how effective it was, because it 
was pretty hard to come up with any really new and unusual idea, 
but it did serve also to inform the people that were on it why 
certain policies finally were as they were. The policies may not 
be that good, but the alternatives are worse. So it was a 
forward- thinking, management development idea. 



67 



Hicke: It was an opportunity for different levels of management to 
interact? 

Jungers: To interact, yes, without really cutting across anybody's--. 
There were minutes kept, but I can't say that anything ever 
really was done by the group or because of it so much. It was a 
place where ideas were generated, and Barger then chose to use 
them or not to use them; if he did, he of course implemented them 
through the organization, not through this group. 

Hicke: Who else was on the committee? 

Jungers: Oh, it would change, but there was a cross-section of middle-to- 
upper management people. Sometimes there were a few Arabs on it 
at that time, but not very many. They were mostly American. I 
was on it for quite some time. 



Acting General Supervisor of Industrial Relations: Aramco's 
Management Training Style 



Hicke: In 1961 then you became acting general supervisor of industrial 
relations? 

Jungers: Oh, yes. 

Hicke: What did that involve? 

Jungers: This was direct supervision of things like schools, training 

department, personnel, personnel policies. It was obviously a 
training assignment for me. I did use it as an opportunity to 
solidify my ideas on how much staff we ought to have and why. It 
had tended to be a little bit overgrown: too much staff 
overpowers and strangles line management, or too much line 
decision sometimes leads to overly snap judgment. That may have 
been another reason why I was assigned there: to try to set some 
courses a little bit better. A lot of people in those sorts of 
jobs, personnel management and things, are usually very capable 
in their way, but they are not very good at organizing and really 
running a line operation. They were good educators, they were 
good doctors, but not necessarily good managers. 

Staff people tend to look for a perfect answer when that 
degree of perfection is less necessary than a timely choice that 
can risk a minor mistake. On the other hand, adequate staff work 
is necessary and required. 



68 



For example, in Aramco, our staff helped develop an 
elaborate management development system, both for Arabs and 
Americans, which developed over the years. Under this system 
every management job- -every supervisory job that really was 
management- -had to have three candidates put against it with 
deliberate statement of what it took to get each candidate ready 
for the job: exactly how long and what were you going to do in 
that length of time. Not just, "Well he needs five more years of 
experience." Which usually amounted to one year of experience 
five times- -a cop-out. [laughter] 

Hicke: Where did this management system come from? 

Jungers: Well, it probably came a lot from the shareholder companies. It 
was an amalgamation of what seemed to work the best. I think, in 
retrospect, it was one of the best systems that ever existed in 
any company that I know of. Each job had to have these three 
people and the time frame, and these were discussed at common 
levels. If you said a doctor wasn't a good administrator, where 
are you going to send him to get administrative training? Are 
you going to let him be a surgeon for ten more years? If he 
really is going to be an administrator, you ought to move him 
out. 

That rarely happened, of course, but in one instance--. 
This person is now a very young, budding executive in Chevron. 
He came from Chevron as a very young engineer, Lloyd Elkins . 
Lloyd is a bright and able man that came out of a producing 
background and worked his way up in Aramco in drilling and 
production jobs. He got on our development lists as "would 
appear capable of this and maybe capable of that." We had a 
system beginning at a real low- level which identified people and 
began to suggest assignments and training to allow him to 
progress . 

Well, at one point, I don't remember what year, but probably 
around the time I was president, we decided that a Lloyd Elkins 
could do some good in focusing our hospital administration. He 
didn't know what a hospital was, really, but we prevailed on the 
medical people to accept a man like this who had shown some good 
management aptitude, and put him in as administrator of the 
hospital, reporting to the medical director, who needed help. We 
put Lloyd in there and Lloyd was extremely disappointed. 

He felt initially that somebody was trying to do away with 
him out of his chosen field, which was really the guts of our 
business. But there were really two reasons: one, to do 
something with the hospital, but also to give Lloyd a broadening 
and to see how he would act in a completely foreign situation, to 



69 



Hicke: 
Jungers 

Hicke: 
Jungers ; 



see what he truly needed to get better. Was he suitable for a 
tough assignment, or was he better off in something he knew? 
Frequently you found out that a person was a great producing guy, 
but if you moved him out of that, he's just really not the 
manager you thought he was. 

Lloyd did a very, very good job of fitting in. He finally 
got the doctors behind him and began to do some really good 
management things in that hospital. 

Later, for personal reasons I think it was, he went back to 
Chevron and began to advance in that organization. He's quite 
high up now; he's a corporate vice president. 

And Aramco was involved in identifying people and putting them in 
these positions? 



We would do that deliberately, yes. 
training program. 



That was part of the 



And that's what was happening to you, I take it? 

That's what was happening to me . I didn't really know it, but 
you begin to suspect when you are put on something like a think 
tank- -why? When you are sent to Shemlan- -why? When you are sent 
to Abqaiq in a producing job, which was after this Dhahran thing, 
assignment- -why? 



Assistant District Manager. Abqaiq 



Hicke: When did you go to Abqaiq? 

Jungers: I don't remember. It must have been about 1960. 

Hicke: Why? 

Jungers: [laughter] Well, I was sent there really as an assistant 

district manager. Each community was run as an entity by an 
overall district manager who received guidance from functional 
staff organizations back in headquarters. But the people in that 
community reported to the district manager, who was in charge in 
a line capacity, was mayor of the town, who was in charge of 
everything right in that area. He had one assistant, and that's 
what I went down there as. Which was obviously a step up, but 
also a step into an area that I really didn't have a great 
knowledge of: production and exploration activity. That was the 



70 



next step. This was a small community like Ras Tanura, out in 
the desert, with a different group of problems. 

Hicke: What were your problems there? 

Jungers: Production, pipelining, all of these things. Many of which I had 
brushed up against with maintenance activities. Producing was 
the budgetary guts of the company, you might say. Everything 
hinged on how much oil you produced. It was from there, I think, 
that I went to New York. 

Hicke: I guess what I have is a little mixed up here. 
Jungers: What do you have? 

Hicke: I have in '61 you became the acting general supervisor of the 

industrial relations department, and then I have in October '62 
you went to Lebanon, and then from '64 to '65 you were assistant 
general manager of the New York operations. 

Jungers: Okay, I got it. My timing was mixed up. Yes, I was assistant 
district manager in 1962 and 1963. 

Hicke: Someplace in there you went to Harvard Business School? 
Jungers: These were all developmental steps. 



Learning Arabic in Lebanon. 1962 



Hicke: Tell me what happened. Where did you go? 
Jungers: To Shemlan, Lebanon in 1962. 
Hicke: And how did that come about? 

Jungers: I had, over my career, studied Arabic on my own. The company had 
some basic Arabic language programs for Americans that were 
really pretty basic. I had taken all of those, and I had studied 
on my own. I had a reasonable, colloquial, spoken knowledge of 
Arabic, at least at a low level of usage. At one point somebody 
had decided, and it probably was Barger and the management 
development committee, that they were going to send some people 
who had demonstrated management capability and who had an 
interest in Arabic to a more formalized Arabic program and give 
them a chance to learn if they wanted to. It was not that I 
really think I had a choice at that point; I think a refusal 



71 



chosen. He was Jim Knight, 
a pretty good Arabist. He 
for a kind of a brush-up, 
say. I did speak a little. 



would have meant that they learned something about me they didn't 
know. [laughter] 

But still I was asked if I wanted to go, and they were 
willing to send me for a year. 

Hicke: What kind of a school was it? 

Jungers: It was called the Middle East Center for Arabic Studies at 

Shemlan in Lebanon. It was run by the British Foreign Office. 
The British sent all of their aspiring, young diplomats -to-be 
that had any thought of working the Middle East there as a 
compulsory exercise. The center did, from time to time, take 
some commercial people in if they wanted to and if they met 
certain qualifications. I and one other were the first ones 

in our relations department, and was 
was only sent there for three months 
I was not a good Arabist, needless to 
, but this was a very rigorous program, 
academically, mostly in Arabic, but also other cultural studies 
and courses. It was ten or twelve hours a day; it was eight 
hours a day of class work and almost that many on homework to 
study the Arabic language alone. 

Hicke: Did you study the religion and-- 

Jungers: Oh, yes. We got a bit of that. Some of the cultural aspects I 

knew, some I didn't. But then they had outside speakers. It was 
a terrifying course, because it was done by a system that only 
the British use where all grades and rankings are posted daily. 
There weren't that many students there. I don't remember how 
many- -thirty or forty- -mostly British, mostly young, diplomatic- 
types, fresh out of Oxford, academically ready to carry on their 
academic work. 

Hicke: In the habit of studying? 

Jungers: In the habit of studying, which I had long forgotten or hadn't 
used. In that system, everybody was divided up into 
"syndicates," they called them. The syndicate was three people 
who studied together, had an instructor together, and were graded 
together. If one of the three began to look a little stronger, 
they'd just move him up a syndicate and then he was the weakest 
guy in the next syndicate, and the best syndicate got the better 
instructors . 

Hicke: And more work? 

Jungers: Yes. And all of the grades were posted publicly. So if you went 



72 



to downtown Beirut one night and got drunk and came back and your 
test showed it the next morning- - 

Hicke: You are up on the bulletin board? 

Jungers: Your grades were posted on the bulletin board. [laughter] And 
Arabic is a very difficult language; the vocabulary is very 
large. In English, an educated, English-speaking vocabulary is 
probably on the order of magnitude of 3,500 words that are 
commonly used. Now your reading is much larger than that, but 
you usually don't use that many words. An educated Arabic spoken 
vocabulary is more like 10,000 words. Of course, the written 
language is correspondingly more also. 

Hicke: I've read they have something like twenty or thirty words for 
camel or things like that. Is that a fair description? 

Jungers: Yes, but more importantly, the language is much more precise than 
English. Take a word like "leave." Well, what does that mean? 
Depart, leave it on the table, leaves on the tree, leave me 
alone. There are many meanings, and for each one of those, 
Arabic has a specific word. And the grammar in Arabic is much 
more complex. But if you must learn 10,000 words in a year of 
study, five days a week, that's thirty words a day. And that 
doesn't count the plurals, which are not predictable. They need 
to be memorized along with the basic noun. 

Well, how do you learn thirty words a day? Well, you put 
the English on one side of a card and the Arabic on the other 
side of the card and you flip them until you've got them. But 
now you've got to go over the thirty you learned yesterday and be 
sure you don't forget those, and the thirty before that and the 
thirty before that. So you have stacks of these cards, and you 
must continually go through them to just memorize those words. 

Hicke: It doesn't leave much time for going to Beirut, does it? 

Jungers: [laughs] No. I had the family in an apartment in downtown 

Beirut and drove up the mountain and stayed there during the week 
and then went back down on weekends. But these word cards were 
just interminable. You took vocabulary tests, and when you 
passed one vocabulary test, you just got another batch of words. 
The verbal noun, like plurals, was also not predictable. So the 
10,000 words were really more than 10,000 memorizations . At 
first it took all day to memorize the required thirty words. 
Well, you learn quickly that you've got about an hour to memorize 
those thirty words and another hour to redo probably another 
couple of hundred that you had memorized previously. The balance 
of the time was necessary for class work, reading, and 



73 



Jungers : 



Hicke: 



Jungers : 



Hicke: 
Jungers ; 



Hicke: 
Jungers : 



interpretation. 



The translations, of course, were graded for precision. We also 
learned the elements of interpretership, which was another 
technique that is more than just knowing the words, and you were 
graded on this also. 

You told me that the transliteration of Arabic that is used now 
is Aramco's. How was that developed? 

Again I've got to say Tom Barger, who was interested in things 
academic and Arabic, developed a staff in Aramco that dealt with 
the language, place names --the geography of the peninsula was 
relatively unknown and there were no maps. What's the name of 
this jebel, this hill? Well, who knew? So the staff went out to 
the desert tribes and asked them what the name of that hill was. 

Then you try to write it down? 

Then you try to write it down and then you try to figure out 
where, exactly, it is located, latitude and longitude and so on. 
Well, that was the beginning of it and that's how we got place 
names. The staff also learned how to establish exact names for 
individuals by asking, "What's your name?" 

"My name's Abdullah." 

"Abdullah who?" 

"Abdullah. I'm from the so-and-so tribe." 

Well, this was really not adequate identification for an 
employee or his family. So Aramco caused the employees to use 
careful identification: Abdullah bin-Muhammad al Hajri, meaning 
Abdullah, son of Muhammad of the Hajri tribe. And Aramco forced 
the use of a system of names that was accurate even though early 
on was not always used by employees. 

The person didn't recognize it? 

He recognized it but it wasn't commonly used. So many systems 
were developed or things were recorded, including a system of 
transliteration that was closer to the sound of Arabic and always 
consistent. There are many sounds, or letters of the alphabet, 
in Arabic that don't occur in English. There are two "k" sounds, 
so one was written a "k" and the second one was a "kh," which 
doesn't occur in English. Similarly there were two "h"s, two 



74 



"g"s, two "t"s, et cetera. The British and the French had used 
rather haphazard transliteration systems which were inconsistent 
and not developed in a scholarly fashion. The Aramco system was 
consistent and logical and gradually became accepted in English 
writings including Arabic -English dictionaries. 

I suppose a similar metamorphosis developed in the Chinese- 
English transliteration which has recently been standardized. 

Hicke: What was it like living in Beirut? 

Jungers: It was lovely. It was like living in an oasis. It was one of 
the truly great cities of the world. 

Hicke: It was? 

Jungers: Yes, it was. Anyone who had ever been there or lived there 
thought so. It had color, it had a meeting of cultures. 
Anything you wanted was there; it was beautiful. 

Hicke: Cosmopolitan? 

Jungers: Cosmopolitan. It ranked with London or San Francisco as a unique 
city. And it was a treat to live there. You ran into various 
problems, but nonetheless it was a living highlight. 

Hicke: And then after you graduated from this school, you said you had 
to practice? 

Jungers: Yes. After finishing the academic portion at Shemlan, you were 
required to put yourself into a position of utilizing this 
language in a demonstrable way- -and preferably in a way that 
forced you to really broaden your usage. When trying to talk in 
a language you are learning, you tend to talk about things for 
which you have a comfortable vocabulary. You don't learn a 
language by sitting and chit-chatting, because you invariably 
drift to comfortable subjects, and so one doesn't learn any new 
words, really. 

Hicke: That's a nice illustration of dealing with another language. 

Jungers: Yes. "Good morning, how are you?" You learn those things over 
and over and you really can't speak the language at all. 



Hicke: 



"What time is breakfast?" That's a useful one. 



75 



Reinforcing Arabic by Teaching School in UNRWA Camps 



Jungers: Yes. So you learn all of these common phrases, but you don't 
learn the language. So the idea was to put yourself in a 
situation where hopefully you were forced to use words and ideas 
that were difficult or foreign to you. Teaching school certainly 
was foreign to me, and teaching mathematics in Arabic required 
expression of different ideas. I had to look up some words to 
describe mathematical phrases. I hadn't had those, really, or if 
I had, I forgot them. So that's where I went. I chose to go to 
a school run by UNRWA [United Nations Relief and Works Agency] in 
one of these refugee camps, Sibleen, and I taught school. 

Hicke: For how long? 
Jungers: For about six weeks. 
Hicke: Those were Palestinians? 

Jungers: Palestinian refugees that were living in a refugee camp run by 
UNRWA in Lebanon. 



Hicke: 
Jungers 



Hicke: 
Jungers : 



Hicke: 



What was that like? 

They lived in tough conditions. They were supplied by UNRWA, the 
United Nations Relief Works Administration. They were supplied 
food and whatnot in this camp. They had no money. These people 
lived in squalor, and they were waiting, as they still are, to be 
treated like people and be allowed to come back to the land that 
was theirs and for which they've never even been compensated. It 
was stolen and not compensated for. The logic of the Jewish 
immigrant living there [in Israel] would be the same logic as 
saying, "Let's give San Francisco back to the Indians, it's 
theirs. Everybody else move out to refugee camps." That's the 
logic. 

Did they seem bitter? 

Yes. Even then, in the '60s. The people that I was teaching had 
never seen their land. They were driven out in the 1940s, so 
they never saw it. All they learned was the bitterness of their 
fathers. Now what they've learned is the bitterness of their 
father, their grandfather, and their great-grandfather, and it's 
just all there. It is unjust. Unfortunately, now it's a fact, 
which is exactly the way the Israelis wanted it. 



Was that the time when these people were visiting? 
to put that story on tape? 



Do you want 



Jungers: Well, that was later. Later, after I had left there and was in 



76 



relations work, was when I made an effort to try to show the 
Palestinian community, the leadership, the academic leadership 
that was at the American University in Beirut and so on, that 
Aramco was a corporation that understood its role, that 
understood the Arab, that realized that it needed to stay in the 
Middle East, that we were indeed a responsible corporation. 

Hicke: You had gone up there to meet with the Palestinians? 

Jungers: So I set up meetings with academic, business, and refugee leaders 
to just have lunch and talk with them, show them that we were 
people just like they, and we have our problems, you've got 
yours, and we try to help in our little way. I'd have these 
meetings once a month, and people like the [Yasser] Arafat and 
George Habbash and so on came to these meetings. Also Professor 
Walid Khalidi, a well known Palestinian intellectual, people like 
that. That's when I had encounters with them. The radicals 
would spout off and I would listen. 

One day, George Habbash, who was as radical a person as 
there was, who was as aggrieved as a Palestinian leader can be, 
got up and said, "Mr. Jungers, you are head of the largest oil 
company in the world. You have all kinds of money, you have all 
kinds of power"- -everybody knew Aramco- -"you should be doing 
more. We all think that. We've heard all of your stories about 
American public opinion and all of this. With all of this money, 
there are only one hundred senators, why don't you just buy them 
off?" [laughter] 

My answer was- -I had learned a lot of these answers in the 
course of my career- -the way you deal with them is to say, "Well, 
I thought of that, but it's a very difficult thing to do in the 
United States. You probably don't know that. But if we are 
going to go that route, my conclusion is that it might be 
quicker, easier, and cheaper to buy all of you guys off." 
[laughs] Stony silence, and finally someone chuckled and 
everybody laughed and they all clapped. This was the only 
approach that really worked with Arabs. The direct approach, 
many times, is the best. Say it like it is. In Sibleen, they 
would bait me, "Do you like the food here, sir?" 

I'd say, "No, I don't. Well, it's good food for you, but 
it's not for me. I go out at night and get better food out in 
the restaurants. Why? Because I can afford it. You can't. You 
have no alternative. So as food goes, you are doing better than 
a lot of the others." It's not answer they liked, but it got me 
out of the bind of either siding with them or not siding with 
them. And it was the truth. 



77 

Hicke: So just you stating the fact-- 
Jungers: Stating the simple fact-- 
Hicke: --brought it out into the open. 

Jungers: I brought it out into the open. I wasn't lying, I wasn't 

representing something that I didn't believe, I wasn't trying to 
tie it to right or wrong. Just the facts. 

Hicke: Yes, the question of "do you like the food" could be troublesome. 

Jungers: Yes it could. 

Hicke: No matter how you answered. 

Jungers: That's right. You are damning the UN or you are saying that I 

really subscribe to the Israeli principles. Neither one is true. 

Hicke: That must have been an enlightening experience. 

Jungers: Yes, and I guess that's what it was designed to be. No one 

believed, including Barger, who knew Arabic, that I would become 
a true Arabist, that I could really negotiate in Arabic, nor that 
anyone really expected me to, but it had many advantages. 

Hicke: You could understand what was being said. 

Jungers: Yes, I could understand, mostly. Everyone knew I had done it, 
which set well with every Arab. Every Arab knew that I spoke 
Arabic, and as long as I kept my mouth shut, people didn't know 
how dumb I was [laughter], and I just let it go at that: I knew 
Arabic. In discussions with people like King Faisal, who had 
pretty good English (it wasn't as good as my Arabic, but nearly), 
we never spoke together in English or in Arabic. He always spoke 
in Arabic, I always spoke in English to him. 

Hicke: And did you use interpreters? 

Jungers: We used interpreters. Generally, his interpreter. He would 
correct the interpreter and I would correct the interpreter. 
Which is important. Furthermore, it had the advantage of giving 
me a little time. It wasn't as though I saw the king every day; 
I saw him occasionally for a specific reason. He was a busy man, 
like anybody in that position would be. You don't have much time 
to really tell him what's on your mind and to be absolutely sure 
he understood what you said and that you understood what he said. 
So any time you can be sure you are understood is helpful. 



78 



That, of course, happens if you and I are talking in English 
on an important subject and we've got only a few minutes. You've 
got to be pretty careful that you said exactly what you meant and 
that you were heard that way and not interpreted wrongly. In two 
languages it's even more difficult. So speaking Arabic was an 
advantage that way. It was also an advantage, I think, because 
someone like the king, or whoever, would know that if he said 
something, "Well, you know our custom in this area," he didn't 
have to elaborate. He knew that I knew that, and we got on with 
what he really was trying to tell me. 

[tape interruption] 



New York: Managing the "Study Group" 



Hicke: I think your next big move was to New York. How did that come 
about? 

Jungers: New York was another training step or at least a broadening step, 
because the New York office was run primarily for the purpose --in 
those years --of dealing with the shareholders and their needs. 
The shareholders, as I mentioned earlier, were not in an equal 
equity position with Aramco, and in those years it was a 30-30- 
30-10 percent shareholding, with Mobil being the 10 percenter. 

By the 1960s, the pricing problem became more and more acute 
for the reasons I mentioned earlier. Therefore, the negotiations 
between the shareholders in Aramco became more frequent, because 
the dividend arrangements needed to be changed more frequently. 
There were more shareholder disputes. The shareholders, and 
their representative company directors, of course, were very much 
interested in the capital expenditures of Aramco, which were 
based upon shareholder crude and refined product needs , and 
needed to be sure that Aramco was controlling these expenditures 
based on production needs. 

So the directors and their staff worked with the New York 
office to communicate their needs to Aramco. Now, you might 
think that this was an easy matter, that they simply communicated 
their needs and Aramco would determine the facilities that were 
needed to produce this oil and produce it. For many reasons, 
this was never an arithmetic summation of their individual 
forecasts . 

The shareholders would forecast oil requirements a number of 
years ahead so that Aramco could provide the capital equipment. 



79 



So the shareholders were forecasting their crude need based on 
their own need plus the needs of the people who were their 
customers, or who they thought might be their customers three, 
four, five years hence. In developing customers, they were 
competitors, so frequently these needs showed up in the estimates 
of more than one shareholder. 

Hicke: The same customer, you mean? 

Jungers: The same customer, very likely. In the New York office, the 

prime responsibility was to analyze these shareholder needs. We 
would ask enough questions about why the various grades of crude 
were needed and when they were needed, about the refined 
products, so that we might be able to determine that some of 
these needs were duplicated. 

f* 

Jungers: In communicating with the board of directors then, Aramco would 
come out with a projected number for each of those grades of 
crude and refined products. And of course the shareholders were 
very interested in these numbers, because they had their own 
ability to deduce whether these were arithmetic additions or not. 
Aramco kept the individual market information confidential. 

Hicke: From each of the shareholders? 

Jungers: Yes, an individual shareholder estimate was never disclosed to 
the other shareholder. In this regard, my job as assistant 
general manager was to chair and communicate with what we called 
a "study group." The study group, which consisted of the 
principal advisors to the shareholder company directors in 
Aramco, talked about these problems and tried to get proposals or 
suggestions back to their director as to how solutions might be 
negotiate in a board meeting. The Aramco New York assistant 
general manager was the nominal chairman of this study group. 
The study group was also highly regarded by the shareholder 
companies as a management development assignment, and they tended 
to assign very capable, high potential people to the group. Some 
examples of their representatives during my tenure: From Exxon: 
D.D. McConnell spent many years as study groups representative. 
From Texaco: A.C. Decrane , now Chairman and CEO and Aramco 
Director. J. Kinnear, former President and CEO. From Chevron: 
George Keller, former Chairman and CEO and Aramco Director. 
Jones McQuinn, Vice President and Director and Aramco Director. 
Dennis Bonney, Vice Chairman. From Mobil: Alan Murray, Chairman 
and CEO. 

So frequently the Aramco shareholder directors were 



80 



graduates of the study group as they progressed on in their 
careers. Later, of course, I progressed on to chairman of Aramco 
through this. 

Hicke: Together with the same people. 

Jungers: And that step was really quite necessary in the development of an 
Aramco chairman, because this was where you got the insight of 
the shareholder problems and the outside directors' problems in 
Aramco. 

My boss at that time as vice president and general manager 
was J.J. [Joe] Johnston, who was an Aramco director and who had 
been in that position most of his career. Primarily because of 
family considerations, it was impractical for him to move to 
Arabia. Joe was thoroughly familiar with shareholder problems, 
the negotiating difficulties between the shareholders, and the 
shareholders' own problems. So the assistant GM position was a 
very, very necessary developmental step in the career of any top 
Aramco executive and was used as such. 

Hicke: But did all of them go through this? 

Jungers: Yes. Liston Hills went through it, John Kelberer, who succeeded 
me, went through it, and a number of others who didn't reach 
chairman but did reach very high and responsible positions went 
through it. 



Senior Vice President of Concession Affairs. 1965-1971 



Hicke: That was 1964 and '65. 

Jungers: Of course, following that job I went back to Arabia and soon 
thereafter became the senior vice president of concession 
affairs, which was a position that was primarily negotiating with 
the governments with which Aramco was involved, whether it was in 
Saudi Arabia or Tapline [countries] . Then I would convey that 
position back to the shareholders, either through Joe Johnston in 
New York or in the board meetings, and try to keep the 
shareholders fully appraised of what was really happening in 
Arabia and how they had to accommodate to demands that were being 
made by the Saudis. Since the Saudis were one of the biggest 
producers, of course, Saudi demands cascaded to other countries 
and of course demands and concessions in other countries came 
back to Saudi Arabia as well. This activity became known as 
"leap-frogging." 



81 



Harvard Advanced Management Program 



Hicke: Somewhere in there you went to Harvard Business School. 

Jungers: Yes, I was sent to the Harvard Advanced Management Program, which 
was a three -month program. The top executives of Aramco were 
sent there. 

Hicke: What did you get out of that? 

Jungers: Well, the program had a case-study method of teaching business 
problems. The primary value in my opinion was the association 
with other executives who, by definition, were assigned to the 
program because they had potential, and many of these men became 
heads of companies and so on. We lived closely enough together 
in the AMP program that even today I occasionally call one of 
those graduates and say, "Hey, I need to know how to get 
something done in your company, can you tell me?" You establish 
the rapport and you acquire self confidence as you see that you 
are able to compete and deal and move in the circles of very top 
people. I think this confidence and positive reinforcement is 
one of its primary values. 

Hicke: When you got back to Saudi Arabia had you seen any major changes? 

Jungers: Well, of course during all of this period the company grew. I 

think that was the main sort of change. This was a short period, 
a year and a half or two. 



82 



Challenges in Concession Affairs: Beginnings of Nationalization 



Hicke: Well, how shall we start on your job as vice president of 

concession affairs? What were the major challenges that you 
started in on? 

Jungers: Well, the major challenge at the time was that I was put into a 
job that was a step under this just for a short period, and it 
wasn't clear to me where I was headed. But then I was told, when 
I went into this job, that I was to be trained so that the 
incumbent, Bob Brougham, could be moved up as president. Bob had 
been a negotiator during his whole career. 

So it was interesting to begin to move around in these 
circles, because Bob had so much background with the Saudis and 
with the negotiations and with the shareholders. Bob was a 
unique negotiator in that he hadn't finished college completely. 
He was a financial man who had come out of Exxon early on, and he 
knew very little of the actual oil business as such, but he was 
very, very intelligent and he understood problems quickly. He 
spoke no Arabic, had no intention to learn. But he was a shrewd 
judge of people and he was a shrewd judge of when he had a 
handhold and when he didn't have a handhold in the negotiation. 
He was a good man to work for, because he could point out the 
practical, pragmatic steps that you had to take in a successful 
negotiation with either the shareholders or the Saudis. He was a 
master at the art of getting enough negotiating room. 

Hicke: What does that mean? 

Jungers: Well, if you wanted to sell a program to the Saudis, you had to 
have the authority from the Aramco board to do so, and what was 
the authority? Well, the authority is the latitude within broad 
limits to negotiate if the process takes an unexpected turn. Of 
course nobody wanted to give up any more than they had to, and so 
if you weren't careful on many of these points, you wouldn't have 
enough authority to negotiate a timely solution, you wouldn't 
know what authority might be given you. 

So you had to carefully explain the upcoming negotiation in 
a way that would ensure that the shareholders truly looked at it 
not as simply how little authority do we have to authorize now, 
but really what is necessary to complete such a negotiation? How 
much authority is necessary? What are we really going to give 
up? You had to give the shareholders a correct feel for the art 
of the possible, and Brougham was very good at giving such an 
assessment . 



83 



Hicke: Are you saying that in most of the negotiations the shareholders 
would give something up? It was a sort of continual--? 

Jungers: For the most part, it was a continual rear guard action, trying 
to retain all of the concession terms, the tax terms, convincing 
the Saudi government and others that it was necessary to retain 
the system that worked. We used every effort and tactic to try 
to hold, knowing we couldn't, knowing that it was going to erode 
as we went along. Aramco really did the best job of holding on. 
You could see the nationalizations taking place elsewhere for all 
kinds of reasons, but we managed to avert actual nationalization, 
which was the worst solution for both parties. 

As part of this program, Bob and I would travel and talk 
with heads of other foreign companies or subsidiaries and meet 
with them- -not really to discuss negotiating position, because 
that was competitive, but rather to find out what situation they 
were being pushed into currently. So we tried not to make the 
mistakes they might have made, tried not to get in traps they 
might have gotten into already, and get their views of where they 
might go. None of the companies wanted to set a bad precedent 
because sooner or later these governments competed and 
communicated. 

Hicke: I was going to ask, did the countries learn from each other, too? 

Jungers: Sure they did. Usually it was competitive. Sort of, "Look, 

fellow OPEC members, what goodies I got in my negotiation. How 
did you do?" Of course, that broke it open somewhere else. This 
was the history of what really happened and the events that were 
leading up to the formation of OPEC and the negotiation of 
ownership, negotiating away the ownership of these concessions 
with the various countries and the nationalizations that resulted 
from not negotiating and so on. We were trying desperately to 
hang onto the concessions that we had as an industry and give 
them up only when we felt we had gotten all of the payment that 
we could for them. That would be far short of what they were 
worth. 

So that became the primary problem. Period. And it lasted 
until everyone had been nationalized and Aramco finally 
negotiated a sale of the company. 



The Formation of OPEC 



Hicke: 



Let's talk about what led up to the formation of OPEC. This is 



84 



the early '60s? 

Jungers: This was in the '60s and the formation of OPEC occurred before I 
moved into this position, but the final form and modus operand! 
culminated while I was there. OPEC, of course, when it was first 
formed, was a very loose group that really didn't have any 
commonality. The member countries weren't sure why they were in 
it. 

Hicke: Who took the lead in forming it? 

Jungers: Finally, although he denied this, it was Saudi Minister of 

Petroleum and Mineral Resources, Sheikh Ahmed Yamani . Of course, 
Yamani found some willing accomplices in Iran, primarily, and 
some of the more radical governments , but it occurred because of 
the English, primarily. The producing countries always suspected 
that the posted price was something that was fixed in the back 
rooms of the oil companies; and fixed as low as possible because 
it determined the taxes and royalties that were to be paid to the 
countries, first of all, and it moved the profits of the business 
out of the producing countries to the downstream. I guess you 
could make a case there was some truth to that. Not the fixing 
in the back rooms, but, yes, of course, each of the companies 
made every effort to keep that posted price down. 

Finally, of course, the companies lost control of the posted 
price when it became the tax reference price. They had to give 
in when, especially as the result of the producing governments 
decreeing a 50 percent tax, an income tax, on the companies. 
This, of course, had a softened impact because that tax was then 
deductible from US income tax, at least most of it. So with 
that, then, being the determining factor in the government's 
income --with taxes based on income of the oil producing 
companies, like Aramco, and with that income based on the posted 
or tax reference price, which was what oil was sold to downstream 
companies- -the dispute was on. What should the posted price be 
and why? 

In spite of efforts of the companies and negotiators like 
Brougham to explain the posted price and how it happened, the 
governments were putting pressure on, insisting that they have a 
hand in setting the price, because it was their livelihood, their 
primary source of income. It was this pressure that finally 
caused the companies to refrain from increasing the posted price, 
even though it was no longer the real price. The price had 
declined in the marketplace, and when some of the companies tried 
to get it back by reducing this posted price, that's when the 
real battle started. 



85 



Hicke : That ' s when OPEC was formed? 

Jungers: OPEC was formed as a counter act, because the producing 

governments felt that there was collusion among the companies in 
setting the posted price. So they decided to collude in 
demanding their participation in that share of the pricing 
decision. 

Hicke: That's what [John Kenneth] Galbraith has called countervailing 
power? 

Jungers: Yes. Because the mechanism of posted pricing was complex and had 
to operate under rules which met the antitrust laws, so that it 
wasn't collusion, and the producing countries were not party to 
the factors that made the market; they couldn't be brought into 
the determination. Once they began to realize that, then they 
looked for other ways to have an influence or to get more income 
or all of the above. This led to the next step in the erosion, 
which was Yamani ' s participation scheme. 

Hicke: Is this part of the mechanics of OPEC? 

Jungers: Well, yes. Let's talk a minute about the mechanics of OPEC. And 
then we can get to some of the other problems. 

OPEC means the Organization of Producing and Exporting 
Countries. It was formed to bring in most of the petroleum 
exporters in the world. This left out the United States, which 
wasn't even then an exporter; it left out Great Britain, which 
had nothing, really, since the North Sea oil hadn't been 
discovered; it left out Mexico, which had, at one time, been an 
exporter but was more or less shut down in their nationalization 
process, which preceded the others. 

So the countries at that time were mostly Arab countries 
like Saudi Arabia, Kuwait, the Emirates, Abu Dhabi. Iraq, Iran, 
all of the main producers of the Gulf, of course, were exporters; 
Libya was an exporter and was an Arab country. But there were 
many non-Arab countries. They were Indonesia- -not Arab; 
Venezuela; Ecuador, which was small, but exported; and later they 
added Gabon and Nigeria as they became exporters. 



Misconceptions Regarding OPEC 



Jungers: I bring this up to demonstrate that this was not an Arab 

organization, as it's commonly tagged in the press. Later, there 



86 



were Arab organizations that were exporters that never became 
part of OPEC and still aren't. Egypt, a relatively large 
producer, is not a part of OPEC. Oman is not a part of OPEC. Of 
course, the governments of the North Sea are not a part of OPEC, 
Mexico is not a part of OPEC, Colombia is not a part of OPEC, and 
they are exporters now. So OPEC really does not speak for all of 
the exporters anymore, and it surely is not Arab. Even though 
Saudi Arabia as the major exporter has a big voice, it still is 
misconstrued. 

Now, why can't, supposedly, OPEC make up its mind, and why 
do they cheat? There are many reasons why this is true, or 
seemingly true. 

Hicke : On each other? You mean they cheat on each other? 

Jungers: Supposedly. First of all, a country like Saudi Arabia has 

flexibility in the amount of oil they can produce; they have 
extra capacity, and they only have, say seven million people in a 
very large country. They need the money to build infrastructure 
because the country is so large. I mean, just the road system is 
a tremendous undertaking. But it's a system that can be 
postponed; it is something that the government can handle 
relatively easily, compared to a country like Nigeria that has a 
tenth of Saudi production capability and 100 million people- - 

Hicke: Who might starve if-- 

Jungers: --who starve if they lose production, and any Nigerian oil 

minister that's going to agree to a reduction in income is going 
to wake up without a job. So they can make agreements, 
supposedly, in OPEC. Only everybody in OPEC knows that they 
really can't, so they don't force them to make agreements that 
are untenable or overlook slight over production. 

Hicke: Well, they're competitors with each other, in a sense. 

Jungers: In that sense, they are competitors, too. They have some of the 
same companies operating in there, and those companies are using 
that to try to negotiate a better deal or hold what they've got. 
So there are many competing forces within OPEC to prevent an 
agreement even though it's thought of as a cartel. 

#1 

Jungers: But a cartel is an organization that absolutely controls the 

market. Cartels just don't exist, except perhaps in diamonds. 
And I suspect that the only reason a diamond cartel exists and 
works is because both the buyer and the seller of diamonds are 



87 



interested in keeping the price up. You don't want your diamond 
ring to go down, so you are quite content to keep paying a higher 
price. You have something in common. But this doesn't happen in 
the oil game. The buyer and the seller of oil are not both 
interested in keeping the price up, just the seller is. The 
needs in this case of the sellers are politically and financially 
quite different. 

Furthermore, today there is so much export going on outside 
of OPEC that even if OPEC were to be able to make an absolute 
decision and stick with it, it doesn't follow that Mexico is 
going to go along with it or Egypt or any of the others , the 
Soviet Union (or now Russia), no. So the idea that somehow this 
thing operates as a cartel is a false idea, that it's an Arab 
group that ought to get along and not cheat on each other, and 
that it's an ironclad cartel is completely a myth in that 
context. 

Hicke: Did that arise because of the leadership of the Saudis? 

Jungers: Yes, it arose because the world, and especially the United 
States, liked to believe in the unreliability of the Arabs, 
because it fit our foreign policy in the Middle East; it fit the 
policy vis-a-vis Israel; and it became a truism. 

Hicke: And the fact that it's not all Arab is largely ignored? 

Jungers: Yes, if not completely unknown due to just journalistic 

sloppiness. They all wanted to visit Saudi Arabia; nobody wanted 
to go to Gabon, and they didn't think that Gabon had any 
influence. Then why are we worried about Gabon cheating? The 
fascination with the cheating premise doesn't make sense. 

Also, of course, OPEC agreements, whatever they were, were 
hard to come by and didn't last for purely financial reasons. 
Currency values change. Oil is sold in dollars, true, but 
depending on which way the dollar was going, they had different 
interests. Almost everything worked against it being a cartel. 

Now, politically it was a cartel, in a way, because they all 
had the same political aims. That is, "We want to be masters of 
our own fate; we must control our own resources; we must act 
against the Western imperialists." These political aims and 
slogans and jargon all were common threads that they could rally 
around, but as a practical matter, it wasn't cohesive. 

Hicke: There was a certain amount of rhetoric involved? 

Jungers: Rhetoric, and of course that was always something that Yamani and 



88 



Hicke: 
Jungers : 

Hicke: 
Jungers : 



Hicke: 
Jungers : 



his counterparts in OPEC could always voice if they couldn't 
think of anything else. What finally worked out was that the 
logic of finance didn't work because of the different needs of 
the countries. The companies were interested in finance; they 
were interested in the sanctity of contracts; and all of these 
things, which were of passing interest to OPEC members to say the 
least. 

So the question became not one of trying to convince the 
Saudis, for example, that this was financially a good deal; that 
was easy. I mean, they could do the finances as well as we 
could. But to try to convince them that somehow you've got to 
draw a line politically as well, and hold your position and not 
be drug around by a minority, highly politicized OPEC member; 
that was more or less the thrust that we had to work on and try 
to give them reasons to not be more radical than the most 
radical. This was, of course, made extremely difficult because 
of the United States' stand on the Israeli question, which was 
the only thing that Arabs could rally around- -this Israeli 
injustice. Had that not been there, there would have been no 
rallying the Arabs on any subject. 

You are talking about the US support of Israel? 

Yes. The blind, unthinking support. It was the thing that 
rallied the Arabs and made them a cohesive force. 

I remember reading in some article where, this was a little bit 
later, in the '70s, Faisal said that that was the major problem 
that he had with the U.S. 

Of course it was, because he was trying to maintain his position 
that he had an American operation that was doing the job. He was 
pro-American anyway, at heart. He disliked the British, he 
didn't want anything to do with the French, but the Arabs, the 
other Arabs, his neighbors, accused him of being an American 
lackey, which he was not. But he couldn't stand that kind of 
political pressure, and that drove him to do a lot of things that 
became very hard to handle. 

This was not pressure from his own people but pressure from-- 

From outside. Yes. From the Iraqis, from the Iranians, who were 
not Arab but who were neighbors, and so on, the Jordanians, the 
Syrians. All who had different agendas, and all of whom had 
relatively nothing in common, except one point: the Israeli point 
rallied them all. 



89 



Government Participation in Aramco 



Hicke: Do you want to go to participation? 

Jungers: Well, we can go to participation. Participation was Yamani's 

avowed idea that the government would buy into Aramco and become 
a true participant and thereby get to know the shareholders' 
problems intimately. Through this method, the Saudis would 
become a shareholder and fight off the rest of the producing 
governments, who were hellbent to nationalize. 

Hicke: How does this correspond with his leadership of OPEC? 

Jungers: Well, his response was that "this just will allow me to take a 
moderate role in OPEC and not have to out-OPEC OPEC." Yamani's 
motives here were highly suspect by all of the oil companies. He 
was prophetic in that you could predict the outcome, but what you 
couldn't predict was, would participation affect the outcome? He 
insisted it would, and the companies weren't so sure. Would that 
just get us into more trouble? Which way would you go under 
fastest, to overstate it? [laughter] 

So we fought the participation question as a rear guard 
action in which the shareholders, for all of the reasons that you 
can think of, didn't want to go the participation route until the 
very last ditch. And it was sort of my job, as I saw it, to carry 
these arguments as far as I could, to hold the line until I truly 
felt that we are either going have participation or we were going 
to be nationalized. It was only then that the shareholder 
companies could evaluate what I was trying to tell them and we'd 
kind of give a little. 

Hicke: Are you speaking now as the head of concession affairs? 

Jungers: Yes. Well, through that whole period. This was a series of 

multi-negotiations on participation and all of the ramifications 
thereof. Yamani , of course, was naive to think this would work, 
or maybe he simply thought he was as so clever that he could out- 
maneuver the companies , which I thought was more the case than 
that he was naive. But he really couldn't see why the 
shareholders wouldn't take him into their marketing strategies 
and their policy-making councils. Well, of -course they wouldn't. 
This was the guts of their operation and was something they 
didn't share with any competitor and for sure not a foreign 
country. Why should they share their market? 

Hicke: Let me clarify this. If he succeeded with participation and 

Saudi Arabia bought a percentage, let's say, his thought was that 



90 



he would be in on all of the directors' meetings? 

Jungers: Oh, he was a director prior to participation discussions. We'll 
get to the distinction there. He wanted to participate in how 
the pricing was done in the marketplace. 

Hicke: He wanted to know how the posted price was set? 

Jungers: Or how any prices worked, and he wanted to be in on all of the 
competitive pricing and everything else that happened in the 
industry. 

Well, that's impossible. It sounded good, but no company 
was going to do that, because once they did it, they would have 
exposed their basic businesses to a future competitor. You could 
discuss the subject for many hours, and we did, all of the 
ramifications. So his continual thrust was to become more of a 
participant. Finally, after a lot of nationalizations had taken 
place and many more were threatened, we finally gave in and sold 
him 25 percent and then more and more until the 100 percent deal 
was negotiated, which I think we would all agree was probably 
better than having it nationalized, because the shareholder 
companies still have a technical input to Aramco and get paid for 
this input . 

Hicke: Can you tell me a little bit about the actual negotiations with 
Yamani? He called you on the telephone or wrote you a letter or 
would say, "Let's meet?" Would you meet with your interpreters? 
How did that work? 

Jungers: In Yamani 's case, I never met with interpreters; we spoke English 
at all times. His English was excellent. He had gone to school 
at Harvard, he had gone to school at NYU, he was a lawyer, an 
American- trained lawyer. He had a degree in psychology or a 
partial major in psychology, which he tried to use, even though 
it wasn't his major skill. 

I'll tell you a story, but not on record, on that one. 
[tape interruption] 



91 



Dealings with Yamani 



Hicke : Incidentally, you wanted to tell me about Yamani and the 
Japanese, since we are talking about Yamani. 

Jungers: Yes, and this is a kind of coincidental thing. In the '60s --and 
I think in the early '60s --the Saudis and the Kuwaitis offered 
concessions in the offshore neutral zone. The neutral zone was a 
piece of land between Saudi Arabia and Kuwait where they couldn't 
agree on the boundaries, and so they carved out this piece of 
land that they agreed to disagree on, and it became the neutral 
zone. They shared it equally. In the Saudis' undivided half of 
the neutral zone, the Getty Oil Company had a concession, and in 
the Kuwaitis' undivided half was Aminoil , which was a loose 
association of small American oil companies. The American 
Independent Oil Company, it was called: Aminoil. Aminoil 
operated its undivided half by dealing with the Kuwaiti 
government; Getty operated his by dealing with the Saudi 
government, and they had separate facilities and they split it 
that way. 

But offshore there hadn't been any concession let, and so 
the Saudis were letting the concession in their undivided half, 
and they finally let it to the Japanese- -the Arabian Oil Company, 
which was Japanese -owned and formed with the sole purpose of 
operating this concession. Much to consternation of Aramco , , 
because we- -and that was before my real negotiating- -tried hard 
to get it, and we didn't. This was some more of the Ministry of 
Petroleum trying to put Aramco into line. 

Hicke: Divide and conquer? 

Jungers: Yes, sort of. The Japanese, of course, wanted this concession 

badly and gave the Saudis an expensive deal both financially and 
management-wise. They did a miserable job, really. And it 
turned out to be a blessing, because they were so bad in the way 
they operated and they were oblivious to social and political 
factors in the Kingdom. 

Hicke: All of the things that Aramco had-- 

Jungers: --that we had carefully nurtured, and they looked terrible by 
comparison. But they had a general manager by the name of 
Hayashi, I knew him well. He was a very sincere man who tried 
very hard to do the right things. He was more or less their 
chief negotiator- -he wasn't head of the company, but he was the 
chief representative to the government. He studied Arabic, and 
we would go to Arab Petroleum Congress meetings, which were 



92 



conducted in Arabic, and he would listen to the speeches in 
Arabic and take notes in Arabic. I could understand the 
speeches, but I surely couldn't take notes. Most of them went 
through an automatic translation system. But Hayashi was that 
good in Arabic. 

Later, Hayashi got so involved in things Arabic that he 
became a Muslim, and he took the name of Omar, Omar Hayashi. 
Frequently, when I went to see Yamani in Riyadh, I'd run into 
Hayashi in Yamani 's office, and if he happened to be in 
conference with Yamani and Yamani knew I was outside, he'd sort 
of say, "Mr. Hayashi, I'll see you later." 

One day I said to Yamani, "You shouldn't have shushed him 
out like that. I could wait." 

He said, "No, that's okay. We were finished anyway. Don't 
worry about it. " 

I said, "Hayashi 's a nice man." 

"Oh, yes. He's very nice. He's a very nice man." 

And I said, "Well, he's trying. His Arabic's pretty good, 
don't you think?" 

"Oh, yes. His Arabic is better than mine. He's really very 
literate." 

I said, "He's just making every effort. I understand he has 
become a Muslim." 

Yamani looked at me and said, "Yes, Muslim or Catholic or 
something." Which, again, showed the-- 

Hicke: A real put-down, yes? 

Jungers: Yes. First of all, this was Yamani. But secondly it also was 
the Arab's suspicion of anybody who tried to become something 
that he might not have been, any American or any foreigner who 
tried to dress like an Arab, who tried to act like an Arab, tried 
to become something besides the American he was. They respected 
Americans mostly because Americans would be Americans. They 
might be ugly Americans at times, but they were Americans and 
they carried through with it. And the Arabs were independent, 
too, especially the Saudis. So we might not have agreed with 
each other, but we understood each other, and we knew where an 
American would be and where a Saudi would be in the scheme of 
things. It was predictable. But when you had a situation like 



93 



Hayashi, he didn't fit. Hayashi, though, meant well and he was 
sincere. I believe that he was a true, believing Muslim, but it 
didn't wash. 

Hicke: It looked too self-serving? 

Jungers: Yes, and insincere, perhaps. So it was, again, an example of the 
independence of the Saudis and the thinking of the Arabs who were 
not taken in by these kinds of things and exterior arguments. 

Hicke: You indicated, also, that Yamani really likes to be one up, that 
he uses his psychology- - 

Jungers: That's right. Under any condition he was using that psychology, 
whether he brought his dogs to the meeting (he had little dogs 
and little cats that he carried around to distract people) to 
one-up them, to put them ill at ease, take them off their stride, 
or whether he did it in other ways. 

Another example of this one-upmanship. Of course, the 
shareholders, quite understandably, at times when we were 
fighting rear guard actions, wondered whether I truly represented 
their positions to the Saudis, to Yamani, to the king, whether I 
went around Yamani and told the king directly, and if so, what 
did I tell him. I was carefully after each one of these meetings 
to write a telex to the shareholders explaining the meeting, if 
not in detail, in careful context to be sure there was no 
misunderstanding about what I had said and what they had said. 
Frequently I had people with me, but sometimes I didn't. But 
anyway, a lot of times they wanted to be sure that I had told the 
king and would suggest that one of them go along or that someone 
else went, and we would see the king. 

One of these times, they insisted that I go to see the king 
with the particular item and give the king a letter explaining 
their position. I argued very strongly against doing that. The 
very act of giving the king a letter is a harsh act, I mean, you 
don't give the king a letter in a dispute unless you are ready to 
kind of take the consequences. 

Hicke: Indicates distrust of everybody? 

Jungers: Yes, distrust of everybody including yourself, and the lack of 
understanding of the king so you have to put it in writing. It 
was the wrong thing to do. But they insisted, and they insisted 
that Listen Hills, who was then my boss, go with me and that he 
do it. So on the appointed day we went to see King Faisal, and I 
don't know what the tipoff was- -it was probably the fact that 
Listen was along that made it look unusual. Yamani was very 



94 



Jungers : 



shrewd and as we walked into the king's office, and the king was 
very cordial. There were three or four ministers sitting in 
there-- Unprecedented. Including Yamani. 

#1 

Yamani grinned at me, and he knew that I knew that he knew that I 
knew and all of this. [laughter] And the king offered us tea 
and coffee and we sat there and Listen said, "Your majesty, I've 
been asked to deliver this letter to you." The king took it and 
laid it on the table beside him- -it was in an envelope, sealed. 
It was not discussed. 



Hicke: He didn't even read it? 

Jungers: No. So finally the audience was over and nothing was said. We 
got up to leave and Yamani said, "Frank, have you got a ride to 
the airport?" There was a sandstorm outside. 

I said, "No." 

He said, "Come on. You and Listen, come on. Let's go to 
the airport. I'll drive you myself." So we got in the car, and 
he put Listen in the back. He said, "You sit in front with me, 
Frank," and I did. We talked about a lot of things and he had 
some other papers he wanted to give me , and when we got to the 
airport, he said, "Oh, by the way, I want to give you this," and 
he handed me the unopened envelope. [laughter] He knew damn 
well what was in it, and he had set the whole deal up. 

Hicke: Clever guy. 

Jungers: He was! 

Hicke: A formidable opponent. [laughter] 



Dealings with King Faisal 



Jungers: There was another incident like that where the shareholders 

decided to send a man with me to tell the king something that we 
had told him before. The man they sent along was a very able 
man, I'm not going to name him, a very good negotiator and a 
highly thought of personality in the oil business. He was going 
to make our points- -again if necessary. We got into the king's 
office and I had along, I believe, Majed Elass , who acted as our 
interpreter, and of course the king's interpreter was there. 



95 



Majed didn't do the interpreting, but I wanted to be sure that 
everyone knew what everybody said, exactly. 

So I was sitting next to the king with this man next to me, 
and we talked about a lot of things and the king was very 
cordial. I don't think he really knew why the other guy was 
there, but he knew who the other guy was. 

Hicke: This was Faisal? 

Jungers: Yes. He finally said, "Mr. So-and-so, tell me about your oil 
business." He said, "Well, you know we need the income. How 
much Saudi oil is your company going to sell next year?" Of 
course, this was all about pricing and the effect of pricing on 
production. Maybe the king did know why he was there, 
[laughter] This direct questioning and not letting him sort of 
open up on why he was there unnerved him, and he, in a kind of a 
high voice, said, "Your majesty, predicting our production 
requirements is very difficult, especially for the future." 
[laughter] The king knew enough English that he smiled at this. 
The man finally did re -tell our story, but the king was amused. 
That's about as far as that got. And of course this reiteration 
of our position didn't change their position. 

Hicke: Did he do that often, go on the attack, so to speak, before you 
would have a chance to explain your business? 

Jungers: No, he really didn't. The king was an astute and a kind man, and 
he wouldn't resort to things like that. I don't think he was 
trying to embarrass anyone then. He was the king, he was 
talking, and he was truly interested in the subject. As long as 
he had an outsider there, he was checking the story. 

Hicke: Right from the horse's mouth? 

Jungers: Yes. "How much oil do you need?" [laughter] 

Hicke: It sounds like you had been talking about that for decades! 

Jungers: Of course! And of course- -and I'm not saying this as a put-down 
or to try to demonstrate my negotiating ability versus someone 
else's because that wasn't the question at all- -if you are not 
used to seeing a personage like that, and if you haven't had some 
practical exposure to it in easy times, you are not going to do 
as well in hard times. It's pretty easy to become tongue-tied 
and stumble and fumble for a minute until you get your act 
together, and you don't have much time. 

Hicke: Do you remember the first time you met Faisal? Was it on a 



96 



Jungers ; 

Hicke: 
Jungers : 



Hicke: 
Jungers : 



Hicke: 
Jungers : 

Hicke: 
Jungers : 



social occasion? 

I don't remember, 
don't remember. 



It was probably before he became king, but I 



What was your way of talking to him? 

I tried to talk to him in a very straightforward, pragmatic, and 
short, clipped way, not get involved in unnecessary detail and so 
on, because you didn't have much time. We weren't close enough 
so that I could bring my personality or my humor or my lack of it 
into play. 

That was something I was going to ask. 

I had to simply state what it was I wanted and why I wanted it or 
why I didn't want it and try to get him to understand what my 
point was and see if I could get a response or get him to think 
about it. It was just that way. I think you'd almost say it 
would be the same way if a person like me walked in to see the 
president of the United States. You might feel more at ease, but 
I doubt it, especially if you knew you had ten minutes to make 
your point about whatever it was; you just don't have the time to 
do an easy, relaxed job of discussing the subject. 

How often did you have to see him? 

Well, we made a point to see him frequently on just a courtesy 
call, nothing else. 

What do you mean by frequent? Once a month? Once a week? 

No, my primary contact with the government was the minister of 
petroleum, under whose jurisdiction Araraco matters fell, and 
therefore we did not try to go around him in any way. But at the 
same time we wanted to be sure that we were getting feedback 
properly, and we would make our presence known by paying a 
courtesy call on the king once a quarter or so. Nothing more 
than a courtesy call. If he then had something to say, we'd hear 
it, and if he didn't, we'd just--. It was a courtesy call. 



97 



An Incident vith the French Press 



Jungers: That reminds me of another story. One time, during a series of 
difficult negotiations, an article appeared in the French press 
and in the Israeli press (we clipped all of these things) stating 
that I was in difficulty, personally, with the government of 
Saudi Arabia and that this difficulty had to do with my refusing 
King Faisal the opportunity for the Saudis to buy oil directly 
from Aramco . 

Hicke: Oh, yes. We need to get that whole story. 

Jungers: We could get the exact story as it was in the press. Of course, 
it was nonsense. I, as chairman of Aramco, am not going to 
refuse the king anything. We would take any request into account 
and give it a considered answer. 

Hicke: A positive answer? 

Jungers: Well, not necessarily, but it would be a considered answer, and 
it would surely be an answer that the board of directors had 
something to say about and so on. This was all part of the 
French and the Israelis trying to develop the myth that the 
Aramco oil company really ran Saudi Arabia or tried to and were 
more imperialistic than the French ever were and were bigger 
irritants to the cause of Israel than anyone else and so forth. 

Well, the rumor persisted as though it were fed from outside 
sources. It moved from being a laughing matter to where you 
began to wonder what's really happening. Then it appeared in the 
press that I had been actually expelled from the country, and it 
appeared during a time that I was outside the country. So you 
began to say, "Hey, maybe there is something to this. How did it 
happen? I don't know." So I came back and got back into the 
country all right and got to the house, and there were the Saudi 
plainclothes secret police in my yard. I knew a lot of these 
people, and I asked the man in charge, "Why are you here?" 

He said, "We are looking for Palestinians." 
I said, "Why do you think they are here?" 

He said, "Well, we don't. We were told to stay here because 
of some Palestinians who, for terrorist reasons, have been 
threatening the oil companies and this and that. We are going to 
guard your place until we catch them." 

Hicke: You mean they thought they were going to attack you? 



98 



Jungers: They didn't say that, but the implication was that if there were 
anybody, they were going to watch over us. Then you say, "Hmm , 
that's strange, that's never happened before. Why would they do 
this?" So my son, Randy, who spoke pretty good Arabic, came 
home, and he saw this, and he asked the guy why they were there, 
and the guy told him. He said, "If you find one of the 
Palestinians, what will you do?" He pulled aside his robe, got 
his gun, and went "fbbbt." They were serious, all right, for 
whatever reason. 

Well, they went away, and nothing more happened, and things 
sort of subsided. One day we got a call from the protocol office 
to my secretary, who had been there for years, an American woman, 
Mary Frances Rose. She said, "The protocol office has called, 
and they said that they wondered why we'd been delinquent in 
paying courtesy a call to the king." I said, "Are we?" 

She said, "Well, no. We sort of--. We've been there--." 
She didn't see this as a problem. We figured when we were last 
there, and this wasn't really the case. 

So I said, "By all means, call back and say we're sorry and 
I'd like an appointment to see the king, courtesy call." 

She called and they said, "Well, we can't do it today and we 
really can't do it tomorrow; he's very busy." This never 
happened. Usually I would get to see him, if I called, within a 
day or two, and he would make a point to see me, if he was in the 
country. This was a kind of a put-off, then. We said, well, 
they are miffed about something and now they are exercising it. 
What is this? What's this got to do with things? 

So a couple of weeks went by, and finally, one morning, they 
called and said, "Be there tomorrow morning; the king wants to 
see you." So I took Majed Elass with me, because this time I was 
nervous enough about the whole series of incidents to really want 
him to be sure I understood. I wanted to have an outsider sit 
there and say he's really ticked off or he's really not. We were 
not put into the king's office where we usually met; we were put 
into a big meeting room, in one end of it, and told to wait. We 
sat there for quite a while, and pretty soon the king came in and 
sat down and ordered coffee. He was irritated and pulling hair 
out of his robe, which he did when he was irritated. 

He had nothing to say and I had nothing to say. I tried to 
pass the time with pleasantries, and he wasn't talking. So we 
sat. I had long ago learned that one thing about Arabs that was 
different from Americans was that if an Arab and I sit together 
and we're friends or whatever, and we have nothing to say, we 



99 



don't say it. It is not necessary to talk. But with Americans 
we have to say, "How is your husband? Nice day," all of these 
things that we don't mean or couldn't care less about, 
must talk. They don't have to talk, 
wait. 



But we 
I learned to just relax and 



So we sat there for what seemed like a long time, and he got 
obviously more and more irritated. Pretty soon the doors burst 
open and in came the press. It was unbelievable. It was mostly 
French press, but it was all kinds of press. And they began 
taking pictures, which was unprecedented. They took pictures of 
me and the king and close-ups and the whole thing. 

Hicke: You said he didn't like to have his picture taken. 

Jungers: No. Finally, he had had enough of this and he shushed them all 
out and they all scattered. That was the end of that, and he 
called for coffee and tea, and he was cordial. 

Hicke: He stopped plucking hairs out of his robe? 

Jungers: Yes, and we talked about things. Finally he had to leave and it 
was over and we left with smiles and all. It dawned on me 
through all of this that he knew that I knew that he was not 
letting the press in without reason. He knew that I knew that he 
was not having his picture taken for no reason. He knew that I 
knew that if he had called me in and said, "Don't worry about 
this French press stuff," that I would walk away wondering, why 
did he feel that he had to tell me that? What was the real 
problem? He could never explain that to me; we weren't close 
friends. But he had figured out a way to tell me clearly and 
definitely there was no problem for me and not just me, but for 
Aramco and that I had better understand that. Similarly his 
denial to the press would have made too much ado about nothing 
and would have raised more questions. The pictures in the papers 
would answer the problem. 

Hicke: And not only you, but everybody else would appreciate it, too. 

Jungers: That's right. There was nothing, and it was beneath him to 

discuss this thing, because there wasn't anything to it in the 
first place. This is the kind of man he was. He knew that I 
knew the answer, and that was the end of it. And he knew that I 
knew why he had to do it this way. That was the end of the whole 
thing. 

Hicke: He was a very perceptive man? 
Jungers: A very perceptive person. 



100 



Hicke: Do you know how it all got started? 

Jungers: It was part of this general oil company /Aramco bashing that was 
going on at the time. 



101 



III PRESIDENT OF ARAMCO, 1971 



Move from Concession Negotiations to President 



Hicke: Actually, we should talk a little bit about when you became 

president. You moved out as the head of concession negotiations? 

Jungers: When Brougham retired as chairman, Listen Hills, who had been 
appointed president, moved to chairman and I became president. 
Listen had been president only a short time, and it was obviously 
a steppingstone for him to become chairman, and I followed. It 
was a seemingly natural movement, because Liston did not have the 
governmental background and so on, and I did. We were seemingly 
a good team. He was more engineering-oriented, was older, so on. 
It appeared that would be the case until he reached retirement. 

While this was the case, there wasn't anyone ready to take 
the job I had, so I kind of had them both, really, and as such, 
my duties hadn't changed a lot. He was the CEO; I was not. 

Hicke: Did you have any increased responsibility? 

Jungers: Oh, sure. As operating head. But it was an interim step. 

obviously. Liston retired shortly, within two years. He'd had a 
setback health-wise and retired early. I became chairman 
following that. But even then, the pace of negotiations and the 
pace of the participation problem and the pace of OPEC had 
increased, so that I was really more involved in that, even then, 
then I might have been otherwise . 

Hicke: Who took over as head of concession negotiations? 

Jungers: We kind of reorganized. We set up John Kelberer from Tapline to 
take some of that, and he finally took it all. There were some 



102 



Hicke: 

Jungers : 



people under him that did parts of it. Then Brock Powers was 
brought up as president, and he really handled operations as 
such, without the concession affairs part. I mean, they were 
nominally head of concession negotiations and president, but in 
jobs like that, you share duties, and the strength of one takes 
predominance in that field, even though it doesn't really show in 
the organization charts. 

Brock was a superb explorationist , and his background was 
exploration- -exploration in the times when Aramco had the 
concession agreement which stipulated relinquishment of territory 
over a period of time. Since we had all of the production we 
needed in the early days, our immediate problem was to find land 
that we could safely relinquish. So Brock really was looking for 
oil, but importantly he was also looking for land that could be 
relinquished, land that pretty clearly had no oil. To Brock's 
and his organization's credit, no one found any oil worth talking 
about on anything which we relinquished, even though much of it 
was all put out to new concessionaires. Many of them spent lots 
of time and dollars to find nothing. Brock knew where there 
wasn't oil, that's for sure. [laughter] Relinquishment became 
very onerous, because as our concession land mass shrunk, we were 
re-drawing maps with all kinds and noncontiguous pieces of land 
we wanted to retain. 

Gerrymandering? 

Gerrymandering this thing so that we were sure not to give up 
valuable land. 



Land Rights and the Aramco Concession 



Hicke: I've been meaning to ask you how the ownership of the oil worked. 
Did you actually own the land? The Saudis conceded the land? Or 
was it oil and gas leasing? 

Jungers: No, the concession gave us the right to explore for oil and to 
produce oil over a total land mass, which was about half the 
country at one time. With it was a clause which said we had to 
relinquish so many acres each year or each succeeding period to a 
final small, relatively small, area stipulated. 

Hicke: Did you own the land up until that point? 

Jungers: There was no ownership of the desert, really; nobody but the 

government owned it. But Aramco had the surface rights to build 



103 



pipelines, roads, do whatever it wanted to any land anywhere in 
the concession. So it was as though we owned it; no one else had 
this right. So from the land that we retained in our concession, 
we retained the surface right. From that surface right, 
therefore- -we had to get the Saudis to agree each time- -we could 
assign that right to make a housing settlement. We actually 
could give the titles of plots to the individuals, and the 
government, which adhered very strictly to the concession terms, 
had to approve use and transfers, but they didn't really have a 
choice . 



Hicke: Did that count as part of the relinquished territory? 
probably too minor to worry about. 



It was 



Jungers : No. We sometimes sold or deeded back the surface rights but we 
relinquished the concession rights separately. A change in 
surface right did not carry with it subsurface right- -that was 
part of the concession. 

Hicke: Oh, I see. 

Jungers: It's as though we retained the mineral rights. 

Hicke: Yes, I see. The concession referred to the mineral rights? 

Jungers: The concession to operate, in other words. 

Hicke: Well, since we have gotten onto the concession agreement a little 
bit, can you just discuss the way that was going? I understand 
it had to be renegotiated from time to time. 

Jungers: The concession agreement as such did not have to be renegotiated. 
The concession agreement that Aramco has is still in place, 
except that after it was taken over from the Saudis, they gave 
much of the relinquished area back into the agreement and an 
additional area that was never in the agreement now is back into 
the Saudi Aramco concession today. So the agreement's in place, 
and unless my memory fails me, the only change really that 
occurred to that agreement was the boundaries of the country 
itself. There were areas like the neutral zone, another neutral 
zone between Saudi Arabia and Iraq, or the lack of boundaries 
between Saudi Arabia and Oman, Saudi Arabia and the Emirates, the 
Abu Dhabis and Dubai. 

Hicke: They weren't part of the-- 

Jungers: These were not defined boundaries- -the lack of boundaries between 



104 



Saudi Arabia and Yemen. The concession agreement read that in 
those areas the concession extended to the agreed boundaries of 
Saudi Arabia. That left it open to whatever they agreed. But 
those boundaries changed and were settled from time to time, and 
these caused changes in the concession agreement boundaries as 
such. Similarly, we ended up in disputes on the boundaries 
offshore. The offshore delineations were not settled, and the 
international laws regarding the delineations changed from time 
to time. 

For example, there was a field found between Bahrain and 
Saudi Arabia which would lie in an area which neither side could 
agree on. But the Saudis just said to the Bahrainis, who were on 
very friendly terms, let's just divide the revenues half and half 
if oil or gas is found. They settled it that way and Aramco was 
the operator. The Bahrainis were happy with that. So the 
concession really only changed in that kind of way as far as I 
recall . 

There were some more problems in Tapline, because the 
northerly parts of Tapline were outside the concession agreement, 
and another set of pipeline agreements had to be reached with 
Saudi Arabia over that, and fees were paid for the pipeline for 
areas outside the concession. Other countries got fees as well 
when the pipeline went through their territory. But the 
concession agreement, as far as I know, was never breached in any 
way and is still in place. 

Hicke: Does that cover that subject? 
Jungers: I think it does. 



105 



IV CHAIRMAN AND CEO, 1973-1978 



Negotiations and Concessions 



Hicke: November of '73 was the date when you became chairman and CEO. 

You got started on participation. By that time it was 25 percent 
sold? 

Jungers : Yes. I'm pretty sure that was the timing, yes. It was after the 
price discussions that took place in Iran where the price really 
broke away and we had that big price run-up. 

Hicke: Do you need to get any more of that on the record? 

Jungers: The dates and prices are, of course, documented in all kinds of 
places, because the primary meetings during that time took place 
in Iran and the companies there were all represented through the 
consortium. This is where some basic agreements were reached 
with regard to pricing. I don't want to try to re-document that 
subject there, because it would be difficult to do by memory. 

Leading into that, however, there was the problem of leap 
frogging among concessionaires, and it was, again, a similar 
problem that OPEC had. It broke out in places like Libya, where 
the country of Libya had quite a bit of oil but they let it out 
to small concessionaires in little pieces. These small 
concessionaires- -the Bunker Hunts, the Occidentals, and Oasis-- 
were small companies and the concessions were extremely valuable 
to them and the oil badly needed by these companies. They would 
give a lot and give early out of fright to keep them. The 
Libyans, of course, knew that. 

Hicke: Are you talking about price or concessions or both? 



106 



Jungers 



Hicke: 
Jungers 



Hicke: 
Jungers : 



Hicke: 
Jungers : 
Hicke: 
Jungers : 

Hicke: 
Jungers : 



Both and concessions in general. So the Libyans and the 
Nigerians- -there were some weak links in Nigeria as well as 
OPEC- -would deliberately attack these small companies to get a 
concession that the big companies would not give. Then, of 
course, the leap-frogging would begin. Yamani would say, "You 
gave up this and that in Libya!" 



Our reply, "We didn't give it up! 
He lumped the industry all together. 



The small companies did! 



"How can I act if you treat me worse than Qaddaf i , of all 
people?" And that was the essence of his argument. We didn't 
give it; in fact we didn't know it had been given. In many 
cases, the shareholder companies had had assurances from the 
small companies that they wouldn't give in, and they turned 
around and did it anyway. 

Just to put this in a sentence, leap-frogging is when one-- 

One company made a concession in a given country that was 
precedent setting, and then one-by-one everybody else got dragged 
into a position that was untenable. So the question was, how can 
we stop this? How can we get a concerted front on some of these 
things without violating antitrust laws? So the US Department of 
Justice was approached by some of the shareholder companies- - 

This was the John McCloy Group? 

Yes. There was a McCloy Group, but later than that, it was re- 
instituted into the London meetings, where the Justice Department 
was represented as a monitor. This monitor was present any time 
all of the major companies met together in London to discuss 
negotiating problems. 

Can we have an approximate date? 
There was a series of meetings. 
In the mid- '70s? 

1970 I believe. These meetings occurred prior to the Teheran 
pricing agreement in 1971. The companies were hopeful that we 
might reach agreements by key negotiations with individual 
countries . 

Did you go? 

Yes, I was frequently, if not always present. They'd try to 
arrive at, say, a negotiating position that all could agree on; 



107 



and instead of letting a small company go to a small 
concessionaire to negotiate it, try to get an agreement that for 
example, Aramco could negotiate with the Saudis and make the 
others conform as a precedent. Sometimes it was me that 
negotiated a given problem and sometimes it was another 
negotiator in another country like Iraq. IPC had a Frenchman, 
Jean Duroc Danner, who was frequently asked to try to negotiate 
in countries like Iraq where IPC was present. 

Hicke: Iraq Petroleum Company? 

Jungers: Yes. And Danner and I attended these meetings to explain what we 
thought the art of the possible was, and of course the non-Aramco 
oil companies would always, by inference at least, accuse the 
Aramco companies or me or Aramco of deliberately wanting to get a 
wider term of reference so that I could be sure to sell our 
requirement to the Saudi government. This was a big hassle. You 
can imagine the discussions that went on where people had 
different interests and were competitors. Other than leap 
frogging, British Petroleum, for example, wasn't interested in 
Saudi Arabia; they were competitors, but they sure didn't want to 
be leap-frogged either. 

Hicke: So even in this the companies themselves had competing interests? 

Jungers: Well of course they did. So this became a series of negotiations 
to try to determine what were the sorts of things that we could 
all live with and try to get and what we could afford to give up. 
We gave up other things. 

Hicke: As a quid pro quo? 

Jungers: As a quid pro quo. So the negotiations took many forms with 

different people. And of course there was a limit as to what we 
could really agree on in this forum, because pricing could not be 
discussed for antitrust reasons. Anything that teetered near the 
antitrust laws couldn't be talked about, and we had the Justice 
Department to insure that it wasn't talked about and to insure 
that everyone understood that. 

Hicke: Can you recall the names of any of the people who were involved 
at the various times? 

Jungers: In the oil company? 
Hicke: In the London meetings. 

Jungers: Well, Sir Eric Drake, the chairman of BP, was usually the 

chairman of the meeting since it was in his offices. The senior 



108 



Aramco directors were surely there, if not the chairmen of the 
companies. They could send anyone they wanted to. Jones McQuinn 
would be there for sure; Keller at times; people like- -Bunker 
Hunt was there at times. 

Hicke: Armand Hammer? 

Jungers: Hammer was there once that I remember. They were all 

represented. There was even a Gulbenkien representative there. 
This story is told not to try to define the discussions that took 
place but rather to demonstrate how this problem evolved and how 
it was worked. If we wanted to go into the historical legal 
discussions and the outcomes and the agreements and all of that, 
they were very involved and you'd need more people than just me 
to recall details of the meetings. 

Hicke: Okay. Was the French company there? 

Jungers: Yes, CFP, Shell, Gulf, IPC, and a number of independents. 

Hicke: What came out of it? 

Jungers: We actually did take certain steps to try to set the right kind 
of precedent with regard to participation and what the terms of 
participation might be. "How do you define participation?" might 
be a topic. 

Hicke: Not just a percentage? 

Jungers: It was not just a percentage; it was much more involved than 

that. Of course, in order to come to that, you had to determine 
what a percentage meant. A percentage of Aramco meant one thing; 
a percentage of the consortium in Iran was another thing. 
Percentage wasn't just an ownership question. In addition to 
equity, production and off -take rights were involved; differences 
in taxes by country, refinery capacity rights. What that meant 
in money to one was different than what it meant to Aramco. So 
it was more than just a simple percentage. It was defining 
terms; it was coming to definite terms before you gave away a 
percentage . 

Hicke: This was all discussed in these meetings? 

Jungers: The topic really was: we've got to act. If we are going to ask 
them for terms, what are we going to ask the negotiator to go in 
there and say? 



Hicke: 



You? 



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Jungers : Me or whoever took a leading role . Should I be the one or should 
it be some shareholder people that go along or do not go along, 
or should they go alone or should they not go alone? We tried 
all variations on that theme, all with the idea of trying to come 
up with the best terms. But before you went in to negotiate, you 
really didn't know which way the discussion was headed. So the 
question always was: is this guy going to go in there and 
unwittingly give the farm away by giving up a small point that 
turns out to be the key to the whole question? Just what is he 
going to say? It was important that the negotiator thoroughly 
understood the subject, had a fair authority, and knew the 
positions of all the principals. 

We were on a tight tether, and rightfully so, on a very 
expensive and precedent- setting series of negotiations. All we 
could do, a guy like me could do, was try to tell the group as a 
group what I had already told my shareholders, which they may or 
may not believe- -maybe they'd believe it better from me than they 
would a, say, Socal representative- -that this is how I thought 
the Saudis would react and how they'd react if I brought this 
subject up this way. A man like the IPC negotiator might have a 
different version of the very same thing, or of what he thought 
the Iraqis would say if he brought it up this way; so he'd want 
to bring it up another way. Everybody would say, "You can't do 
that because, God! that opens up this other box!" This was all 
very involved. 

Hicke: So everybody was looking to Aramco to set the precedent, but they 
also wanted all of their interests protected? 

Jungers: Sure. And they weren't looking to Aramco so much because it was 
Aramco, but I think they were pretty well convinced that the 
Saudis were, if anything, more responsible when they agreed to 
something, whereas you couldn't believe a Qaddafi. He'd agree 
and then the next morning make a deal with Bunker Hunt. The 
Iranians and the Shah were certainly not reliable. Nobody wanted 
to carry something like this into Indonesia. Indonesia is part 
of OPEC, incidentally; we missed that one this morning. And you 
sure don't want to trot off to Gabon or Nigeria or someplace- - 

Hicke: They wouldn't set a precedent anyway. 

Jungers: Well, no. And even if they did, it wouldn't last. They couldn't 
sustain a precedent. 

Hicke: What about Iraq? 

Jungers: Iraq was a tough place to work. IPC was very strong there, 

however, and they had a good negotiator, Jean Duroc Banner. Jean 



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could get some surprising things done in Iraq at times; so he 
frequently was sent to Iraq. Usually it was people like Jean and 
me; we went our separate ways to these two countries as the first 
step and we got back and compared notes. From that we would try 
to decide: "What do we do now? It took a bad bounce." 

Hicke: Did increased participation come along through all this? 

Jungers: This was all part of the whole package. Of course everybody 

understands participation. You could multiply it by a percentage 
number, but it was hard to find out what it really meant and how 
you accounted for it and what was its tax effect- -depending on 
its form- -what was the tax effect in the country of the owners. 
If you did give a percentage away, how did it have to be worded 
so that it met tax laws? It was extremely complex. 

Hicke: The next step was up to 60 percent, or was there an intermediate 
step? 

Jungers: No, we finally gave in at 60 [percent], the next step, and then 

lastly at 100 [percent] . But by then a lot of companies had been 
nationalized; so the precedent was set. The question merely was: 
what did we get for it by not agreeing too quickly? Of course, 
we all went through- -and the shareholder representatives and 
directors as well- -we all would go through the agonies of saying, 
in retrospect, "What if I had done it this way? Would it have 
changed anything?" Or maybe you didn't do a good enough job 
telling them and this is why, then let's send them a letter, 
let's do this, let's do that. 

Hicke: Let's take a little break, 
[tape interruption] 



Negotiating with the Bahrainian Government and Accepting a Gift 



Jungers: As part of the concession agreement anomalies it is interesting 
to talk about an oil field that Aramco found in between Bahrain 
and Saudi Arabia. Aramco found this field and delineated it and 
it was a good field: Abu Safa. But it turned out to be a rather 
expensive field in Aramco 's priority of things; we learned this 
when we first put it into production. After it was producing a 
while, it was apparent that the field had characteristics that 
would require ongoing production expenditures to sustain 
production and that put it outside the priority of things in 
Aramco. And, of course, this field, as I mentioned earlier, was 



Ill 



split 50-50 between the Saudis and Bahrainis. So preferentially, 
Aramco, when not needing oil, would shut this field down to try 
to slow the expenditures and preferentially produce cheaper 
fields. 

Hicke: That was one of the swing areas? 

Jungers: Swing areas, then. So the government of Saudi Arabia, through 
Yamani, wondered why we didn't produce the field. They were 
being pushed by the government of Bahrain to get more production 
because the Bahrainis needed the money. So I set out to explain 
to them why this was the case. At one point in time 1 actually 
went in with Yamani to talk to the king about this. The king let 
it be known that they really wanted to produce the field anyway, 
and they wished that Aramco would do something to get the 
Bahrainis off their back, because it was embarrassing to them to 
not be able to do something and it was embarrassing to the 
Bahrainis to come to them requesting favors. Couldn't we work 
this out at the oil field level some way and not make an 
international incident out of it? 

So I made an appointment through the minister of development 
in Bahrain, whom we knew and who was the lead man on this, to go 
in and see the Bahrainis to talk about this problem. 

Hicke: Which Bahrain!? 

Jungers: The ruler, Sheikh Isa. So Yousef Sharaivi, who was the minister, 
took me in to see Sheikh Isa, who is a delightful man- -I'd met 
him before- -very short in stature, a perpetual, likeable grin on 
his face, very active in the country with the people; made 
special efforts to treat foreigners properly, set out a special 
beach for foreign women where they wouldn't be bothered and could 
sun themselves and so on. 



Jungers: We talked about their problem, and their problem was, simply, 
that they didn't have enough money to carry out a development 
budget that they designed and needed. They sincerely hoped that 
we would do our best to help them, because they got 50 percent of 
the revenues from Abu Safa. So he asked me to sit with Yousef 
Sharaivi and the Minister of Finance and see if we couldn't come 
to some accommodation. He realized that we didn't have a 
concession in Bahrain, and he didn't want to put any undue 
pressure on us, but it sure would be helpful. 

So Yousef and I sat down, and we talked about the problem. 
I finally said, "What is the problem? What is your budget 



112 



shortfall? Let's just see if it's possible for us to accommodate 
it without causing us a lot of trouble." And it was something 
that was do-able, really. It wasn't what we would have done, but 
it wasn't something that really killed us, and so I agreed that 
we could meet that budget in the coming year. 

Then, as we talked more and more, we said, "Why, instead of 
having these kind of problems when you have a budget--! don't 
want to interject myself as controlling your budget; let's not 
get me wrong here --but when you have a budget and while it's 
still in draft form, can't we see it? Then we can give you some 
indication of whether we can do this, or can we explain our 
degree of hurt to you and can we somehow reach an accommodation 
that's satisfactory to all of us without us interfering in your 
affairs? You are a sovereign country and we have no business in 
this." So we took this plan to Sheikh Isa the next day, and 
Sheikh Isa thought it was a great idea. He was not a suspicious 
politician. So that's exactly what we did. I went back and told 
the Saudis what had happened, and they thought it was a super 
idea because it got everybody out of the bind. So, to my 
knowledge, this system still works. 

Hicke: That's a story with a happy ending. 

Jungers: Yes. And as part of that story it brings another one up. I had 
my wife along with me on that trip to Bahrain, and we were 
getting on our plane, the company plane, to go back to Arabia. 
As we were getting on our plane, Yousef, the minister, had a box 
all wrapped, and he said, "Frank, this is for you." I said, 
"What is this?" Everybody knows that Aramco did not accept 
gifts, did not under any circumstances pay anybody for 
anything- -and I'll get back to that one, because it's a very 
important point- -and Yousef knew all this and he said, "Frank, 
for God's sake, for once in your life have the grace to accept 
something and just be quiet. These are gifts from the ruler." 

Well, we had a rule in Aramco. We had tried in every which 
way to deal with the problem of gifts. In a society of that 
kind, gift-giving is not unusual and it is not necessarily 
thought of as a bribe. Therefore, it depends a lot on who is 
giving what to whom as to whether it's appropriate or not. You 
can't just put a dollar limit on it. It's hard to define what 
this gift might be: a gold pen from a contractor to an engineer 
that's letting the contract, that's inappropriate; a gift of a 
gold pen to the president of the company from a business man, 
it's a small gift, it doesn't have any bad purpose, it's surely 
not a bribe. So we devised a plan in Aramco that all gifts, 
regardless of size, given to anybody in the company, president, 
chairman on down to the lowest level, must be declared, not to 



113 



the management, but to one's peers. Your peers will decide 
whether you should keep the gift, give it back, take it but warn 
that you shouldn't take it again, put it in a museum, or what. 
We did that and it was a peer question. 

Hicke: And it worked? 

Jungers: As far as I know it worked. So my peers, of course, were the 
next level of people down. I didn't have any peers. This 
Bahraini gift was a very nice gold dagger with original pearls in 
it and a watch and a couple of gold bracelets. They were nice, 
old kind of things. Again, certainly not a bribe, surely not out 
of keeping with the giver. 

Hicke: And it was after the fact. 

Jungers: After the fact. It was in appreciation for an accommodation that 
really got everybody off the hook. So the peer group decided I 
should keep it. I was prepared to put it in a museum, and they 
thought I should keep it, but that I should also tell the Saudis 
I had gotten it, just as a matter of form. The Saudis couldn't 
have cared less, of course, but again to make sure that everybody 
knew that it was out in the open. 

I brought this up as a happy ending to the story but also to 
introduce the gift-giving problem and, to Mr. Davies's credit- -he 
started the company, really- -and it was he who set the initial 
policy, as far as I know, that said thou shalt not, under any 
circumstance, pay bribes to do anything, get things through 
customs, suppliers, or anything else under any circumstances, and 
for any breach of this Aramco policy you are fired. This was and 
still is firm Aramco policy. 

Hicke: That's a considerable handicap. 

Jungers: Yes. And you can imagine coming ashore in boats and trying to 
get stuff through a customs system that doesn't understand 
anything but bribery and surely doesn't understand industrial 
business and American ways and all of this and not succumbing 
when for minor payments you could get immediate clearance for 
material that would take you two weeks of negotiation otherwise. 
This was a serious matter. I don't know any Arab businessman 
that won't tell you when dealing with Aramco it's straight up; 
nobody gives anybody anything to this day. I just had Abdullah 
Rashaid reaffirm that one day. Now Aramco is run by Saudis, and 
these Saudis have the same standard, the same as it's always 
been. Nobody asks anymore. They know Aramco doesn't give it. 
Period. It is remarkable. There have been instances where it 
was done and found out, and in every one that I know of, it was 



114 



immediately "You're fired." 

Hicke: Although it took decades probably to establish that. 
Jungers: It could have been torn down in five minutes. 
Hicke: Yes, but it's also one problem you don't have to face now. 

Jungers: That's right. Another example just falls in this area of 

anecdotes. Not long before I left and again you've got to 
realize that I was well known- -the board of directors of Allis- 
Chalmers [corporation] came over. They had done a lot of 
business in Arabia, and the chairman, David Scott, wanted them to 
meet their partners there and in turn meet Aramco people. I did 
know David. So David had a big dinner at a hotel for the people 
he had done business with in Aramco and outside, businessmen that 
they had worked with. I was invited to it, of course, and so 
were a lot of other people. I was sitting across the table from 
a well-known Saudi businessman from Jeddah whom we had met 
before, but I really didn't know him. We were kind of happy to 
have the chance to talk a little at dinner. He had a most 
unusual set of prayer beads--! hadn't seen anything like that. I 
made the mistake of saying, "Aren't those nice?" 

"They're yours!" He was delighted to have caught me. He 
knew that I knew I was caught, and there was no way I could 
gracefully refuse since this was deep-rooted custom. They are in 
the Aramco museum. I just felt, and I told the peer group, I 
thought that this was really an inappropriate thing for me to 
decline. I brought it on myself. This was a businessman of some 
renown, and this could have been seen by others as inappropriate, 
and I can't give them back, so we'll put them in the museum, and 
I'd like to give him an expensive and appropriate gift in return 
and tell him, "I made a bad mistake and I'm making a bad mistake 
in giving you this. You take it and we'll all be happy and let's 
leave well enough alone." [laughter] And I did that. 

Hicke: What were the prayer beads like? 

Jungers: They were gold and mother-of-pearl. Beautiful things. Old, old, 
beautiful. I even said to him, "I can give them back to you and 
no one will ever know." He said, "You know that's not possible." 
I said, "Well, they are going in a museum." He said, "Okay, put 
them in the museum." I said, "I'm going to put your name on 
them." He said, "That's okay." 



115 



Prospects for the Future of the Saudi Monarchy 



Hicke: 



Jungers 



Hicke: 
Jungers : 



Hicke: 
Jungers : 

Hicke: 
Jungers : 



Okay, now, if you have the energy, we could pick up the subject 
of the change of leadership and how the role was passed along. 

Okay, the line of succession and the selection of the incumbent. 
And maybe it's necessary before we get to that to deal with 
another subject that's appropriate. Many times I'm asked, "How 
long will the monarchy last, and why isn't the monarchy 
discontinued and a more democratic form of government put in its 
place?" To me this is always an amusing question, because it 
implies that our form is better, and all you have to do is look 
at recent elections and say to yourself that that isn't 
necessarily true. 

My answer to it is that I'm as well aware as anyone that 
monarchies are a thing of the past for the most part on this 
earth. But in the case of the Saudis, I don't see that changing 
very quickly, and certainly not in this century and maybe not in 
the next for all I know. The reason is it's an absolute monarchy 
but it is also a representative monarchy, in a way. The success 
with which they keep it a representative monarchy will determine 
its tenure. Founding King Abd-al Aziz married into every major 
tribe in the country. He had approximately fifty- three sons from 
women in those tribes. Most of these sons are not full brothers. 
These sons then became a matter of pride of the tribe. 

Of the tribe? 

Of the tribe the mother came from. They became, and are, the 
means of communicating with that tribe, back and forth, a 
representative form of input to the ruler. They go to great 
lengths to preserve that, including these Thursday morning 
meetings we already talked about. 

One of the more unusual forms of representative government? 

Yes, and I know that the old king did this deliberately because 
he was trying to pull a splintered tribal society together and 
the only way he could really do it was this form, especially when 
considering their lack of a concept of a united nation. 



It's an old, feudal, medieval custom. 

It worked to a certain extent whenever it was practiced, 
the Hapsburgs, who were part of every royalty in Europe, 
of worked the same way. 



Like 
It sort 



116 



Hicke: That's fascinating. 

Jungers: These sons, then, became and are the representatives of their 
families, de facto, though not necessarily recognized as such. 
There is no governmental form to support this. And so these sons 
then became the line of succession based upon their age, the 
oldest being the first one designated as king after Abd-al Aziz 
died. He turned out to be a poor and ineffective ruler. 

Hicke: King Saud? 

Jungers: King Saud. He was not able to cope with the changes that were 

occurring due to oil and the money that poured in and was deposed 
by the family, at first temporarily, and Faisal became the regent 
while they attempted to somehow change him. He got back into 
power only to be finally deposed for good and Faisal was made 
king. 

Hicke: Was he the second brother? 

Jungers: He was the third ruler: the father, Saud, and Faisal. So the 

question arises, who decided to depose the king temporarily, then 
bring him back, then depose him permanently? And who decided to 
bypass the next brother and put King Faisal in place? This was 
done without coup, without shooting in the streets or anything. 

Hicke: No military? 

Jungers: No military whatsoever. As a matter of fact, one part of the 

military, that is, the normal military, is under the minister of 
defense, who is one of the brothers. The national guard is under 
another brother, who is the half brother of the minister of 
defense. He is not in the same family as the minister of defense 
and that is deliberate. So there are two armies, really. That 
is deliberate. 

Hicke: They belong to different tribes, these two half brothers? 

Jungers: Yes. Well, who decides? Well, Aramco's research group labored 
mightily over this for years. We thought we knew some of the 
"deciders," but we never really knew who they were and certainly 
not all of them. There really is no formal group that does the 
deciding. It is a family group, obviously. We were pretty sure 
that family group is not the brothers, or if it is one or two, 
they are not doing the deciding. Who is it, then? Well, it is a 
series of elders of these various tribal families. Who? We 
don't know. We did know, for a while, that Abdullah bin Abdul 
Rahman, who was an uncle of the brothers from a different side of 
the family, was certainly one of those decision-makers. 



117 



Hicke: An uncle. So he was a sibling of the mother, the wife of King 
Abd-al Aziz? Is that right? 

Jungers: Yes, he was an uncle from a family that was on the other side of 
Abd-al Aziz bin Saud's father. 

Hicke: They are related to the king, originally? 

Jungers: Yes. This man was a very prestigious man that I got to know 
really quite well considering that he had nothing to do with 
Aramco. I knew him well before I was in the top job. He was a 
very intelligent man, a very curious, inquisitive man. Spoke no 
English, would frequently ask questions about the oil field which 
demonstrated a lack of knowledge but still a common sense that 
made him realize that it couldn't be something that he was 
thinking about, because his concept of an oil field was 
illogical. For example, he wondered if oil existed in a pool 
underneath the ground, what was the big problem in getting it out 
of the ground? He'd heard of these production problems and such 
things, and why would this be such a problem? Was it different 
between fields? I was called over there one time to explain that 
to him. 

Hicke: He was thinking of an oil well as being like a water well? 

Jungers: Yes, sort of. I had to explain that oil exists in rock and when 
the pressure releases it, it gushes, and so forth. He was 
surprised at that but nonetheless had the intelligence to ask the 
question. He had figured out that his concept had to be wrong. 
He was that kind of a man. One time, when I went to see King 
Faisal in Taif, where the government offices were in the 
summertime- -the government moved to the mountains in the summer; 
it moved from the central province to the western province, to 
not show favoritism between the Nejd and the Hejaz--! went to see 
the king there by appointment, and all of a sudden the king said, 
"A friend of yours, Sheikh Abdullah, is coming." And in walked 
Abdullah bin Abdul-Rahman and walked over to greet me. The king 
stood and everybody in the room stood when he walked in. 

Hicke: When the uncle walked in? 

Jungers: When the uncle walked in. They obviously gave him great 
deference. 

Hicke: Even the king? 

Jungers: Even the king. A man that the king would rise for. 

Hicke: The king wouldn't stand up for anybody else? 



118 



Jungers: No. He was the king. So this man had to be an elder who 
probably had a say in the succession. There were others, 
obviously, from different families, who had such a say. Who are 
they and what happened when they died? Because the system still 
works. They bypass people. When King Faisal was shot, King 
Khalid took over. He was designated prior, a long time prior, as 
crown prince. 

Hicke: So he was not the next one? 

Jungers: He happened to be the next brother in line. He was not 

particularly well suited in that he obviously had no aspirations 
to rule and thus was not prepared. 



Jungers: He truly was a desert -loving Arab Bedouin in his background. 
Immediately after his designation as king, his successor was 
designated, who was Prince, now King Fahd. As I recall, one or 
two people were bypassed at that time. At the same time, Fahd's 
crown prince was designated, and that was Prince Abdullah, who is 
head of the national guard now. King Fahd is a member of the 
Sadari family; his mother was a Sadari woman, and she had seven 
sons by the old king, and each of these sons is successful in his 
own right. The second Sadari of the "Sadari Seven," so known, is 
Sultan, who has already been designated the crown prince after 
Abdullah. So they have already designated two successors in 
order. There is no squabbling. They are designated ahead of 
time. 



Hicke: How do you know? 

Jungers: They announce it publicly. Then there are certain of these 

brothers who are given cabinet positions. Sultan, of course, is 
the minister of defense, and he's the second crown prince. 
Abdullah was head of the national guard; that's not cabinet - 
level, however. Amir Naif is now minister of interior; he's one 
of the Sadari Seven. Some of the cabinet positions go to 
brothers and some go to commoners like Yamani or the current 
minister of petroleum, Hisham Nazar. Who decides that? 

Hicke: Doesn't the king make those kinds of decisions? 

Jungers: Well, if it's a commoner, I think that's true, but if it's one 

brother over another brother, who decides? And how? It's not by 
age. And furthermore, the minister of foreign affairs is Saud 
bin Faisal, Saud the son of Faisal, in a very critical cabinet 
job ahead of his uncles. He's not in the line of succession, but 
he's a family member and he's a nephew. Who decided that? It 



119 



was done after Faisal's death. Another one of Faisal's sons, 
Turkic bin Faisal, became head of the secret police. A nephew in 
such a sensitive job that has such sensitive knowledge? 

Hicke: About how old is this nephew? 

Jungers: Today they are in their forties. The head of the secret police 
had been Kamal Adham, who was married to Faisal's sister, and he 
kind of selected Turkie bin Faisal to train him and he was a 
protege. When the king died, Kamal Adham stepped down and Turkie 
was designated as head of the secret police. That's 
unprecedented. I mean, if you think about it, that had to be 
decided by somebody besides the brothers. Who does he report to? 

Hicke: What are the implications of all of this? 

Jungers: The implications are that this is a representative form of some 
kind. The designation of who succeeds whom is done by somebody 
that's not in the line of succession. Similarly, President Bush 
is not designating the next president. 

Hicke: And it's also done perhaps by people from various tribes? 

Jungers: It has to be, by some kind of agreement somehow. Some kind of a 
political maneuver is taking place behind the scenes to do this. 
Some consensus has to be taking place , and to me this means that 
this is a representative process. Unless somebody grossly 
oversteps his bounds and tries to abolish that system, that 
monarchy is going to stay in place for a while. 

Hicke: Would you suggest that the king might be responsible in some way 
to these people? 

Jungers: Yes. 

Hicke: He must be if they can depose him. 

Jungers: They deposed a king once. In fact, they deposed the same king 
twice. [laughter] 

Hicke: That is very interesting. 

Jungers: It's very interesting. And I have never heard a satisfactory 

explanation for this that would lead me to believe that this is a 
sole, single, absolute monarchy that did this. It's not true. 



120 



The Death of King Faisal. 1976 



Hicke: Another thing we want to talk about is the death of King Faisal. 
Maybe this is a good time to do that. 

Jungers: All right. I got a call one noon at my house from a very excited 
protocol officer who said, "Frank, we need an airplane right away 
and we need doctors right away." 

I said, "What kind of doctors? What's happened?" 

He said, "Frank, think of the worst. It's happened." 

I said, "Really? How did it happen?" 

"He was shot. " 

"What kind of doctors do you need?" 

"I don't know. We need them and we need them right away. 
And we need them over here by air." He was just beside himself, 
and he couldn't describe anything. So we loaded up a plane with 
doctors and equipment as fast as we could and were trying to 
think of what it might be, head injury, heart injury, and sent 
them over there. By the time they got there, the king had died. 
He was shot by a deranged nephew. There was a big investigation 
conducted, and this was no organized event. 

Hicke: This was 1976? 

Jungers: Yes. So that afternoon, knowing that all Saudis are buried the 
same day they die and they are buried in unmarked graves, I 
called the protocol office again and said that I would like to 
come over and pay respects to the family. I realized that this 
would be an unusual time and there would be other heads of state 
and whatnot that would have to be accommodated, but I wanted to 
come at the most appropriate time, and would he please let me 
know? He said, "I sure will. I'll get with the family and we'll 
let you know as soon as we can." They called the next morning 
and said, "Would you come over now? Be here by noon." 

I said, "Sure, you bet." So I took Majed Elass with me and 
we flew in. They met the plane, a military group met the plane, 
and we were put in a car and were taken to the center of town, 
Riyadh, and escorted into the city square area that had been set 
up with tents and seating and told to wait. We were the first or 
second people in this place, and we were sitting there, and it 
was getting kind of warm. We didn't really know what the program 



121 



Hicke: 
Jungers : 

Hicke: 
Jungers : 
Hicke: 



was, and pretty soon various heads of state began to walk in, and 
they included even Idi Amin, who came with his son who was 
dressed like him and he had a little six-shooter on his hip. Of 
course Idi Amin was a Muslim. The only American there besides me 
and Majed was the American ambassador, as 1 recall. There were 
people like the president of Lebanon, the king of Jordan and 
representatives of Western governments. 

We were all sitting quietly and all of a sudden the gates 
burst open and we went in. People were running in and the man 
from the protocol office came and grabbed me and said, "Follow me 
quickly. Get ahead of everybody." So I followed him and came 
upon the slab with the king laying on it with a cloth over him, a 
white cloth, carried by his sons, including Saud, who was 
minister of state affairs at that time. They were all crying. 
It was the king. They hadn't buried him. This was most unusual. 
Unprecedented. I know some of the sons like Saud, the minister 
of state, and Turkie , head of the secret police, very well, and I 
paid my respects to them quickly and they thanked me. 

Then the protocol people and the army people told me, "Maybe 
it's best that you kind of keep moving, because what we are going 
to do is hold a prayer for him in the mosque and you're not a 
Muslim. We are going to move all of you non-Muslims out of the 
way, and we will take him to the mosque, and then we will get rid 
of the rest of the guests and the family will bury him. 
Meanwhile, we'll get you back to the airport before everyone 
descends on you." We were being treated very nicely and with 
great deference. 

The next few days I got more of the story, and they did, 
indeed, go into the mosque and afterwards they excused everyone 
and went to bury the king and everyone left except Idi Amin. He 
wouldn't leave. He insisted on going to the burial and indeed he 
wielded the shovel. 

Oh, for heaven's sake. 

The protocol officer told me. There was just nothing they could 
do with the guy. In spite of that, he made enough of an 
impression that when he got in trouble, they brought him to Saudi 
Arabia where he lives in exile. 

Is that right? 

Yes. He's demented to say the least, but they took care of him. 

Why had they not buried the king? 



122 



Jungers: I guess they felt that he was such an international figure and so 
well thought of and liked by everybody that he merited something 
closer to a funeral that other heads of state might get. 

Hicke: Did they bury him in an unmarked grave? 

Jungers: As far as I know. It's a scene that I won't forget. 

Hicke: Very well described. I felt myself right there. Then Khalid? 

Jungers: King Khalid was installed as king. I met him while he was king a 
number of times before I left. I left on the first of January, 
1978. Two days before I left, President Jimmy Carter visited 
Saudi Arabia, and they wondered what they should do with 
President Carter. King Khalid didn't want to make a speech, and 
nobody really wanted to say anything publicly about the United 
States, who had given them all this trouble. 

Hicke: Why was he there? 

Jungers: A goodwill gesture, which they understood, but they didn't want 

to be seen, really, with, at the time, any U.S. president. I was 
invited to the dinner, which was really quite small. They said 
they were going to keep it small. Other than the American 
ambassador, I was the only American at the dinner. There were 
some Americans with the president's entourage that were there, of 
course. They asked me, "What should we do? The king doesn't 
want to make a speech and we really don't want the president to 
make a speech. What should we do?" 

I said, "I would say have the dinner and talk with the 
president at dinner and have the king talk with him and just tell 
him that this is a small group and our custom is to have coffee 
afterward and get up and go have coffee and it's over." Which 
they did. Of course, everyone crowded around the president, as I 
did. I had never met him and just wanted to see him and talk to 
him. The protocol people came to me and said, "Frank, would you 
go talk to the king? He is standing alone over there . " 
[laughter] 

So I went to talk to him; he spoke no English. He was a 
genuinely nice man of Bedouin background. He loved the desert. 
He loved falconry and camping. 

Hicke: I saw a picture of him with a falcon. 

Jungers: Yes. He said to me- -we just chit-chatted the best I could. 

Hicke: That night? 



123 



Jungers: That night, just to take up the time. He said, "You have a very 
good man working for you in Aramco . " 

I said, "Oh, thank you very much. Who is he?" 

He said, "By God, I don't know. His name is John. He's a 
good man. You ought to keep track of him. He's a very good 
man. " 

I said, "I certainly will. Can you tell me, John is kind of 
a usual name, can you recall his last name?" 

"I can't," he said. 

I said, "Well, can you tell me what he did? How did you 
meet him?" 

"Well, I was camped in the desert and he came to our camp. 
He's a most outstanding man. Speaks good Arabic. He has a true 
appreciation of the Arab of the desert. He loves falconry. I'm 
sure you can use this man in all kinds of ways. He's really a 
good man." Well, it turned out it was a fellow we had in our 
research group and he was out in the desert and went to talk to 
the king. He does know falconry and some of the desert lore and 
so on. But this was what the king loved and appreciated. There 
always was concern that he didn't want to be king, but of course 
when people become king they learn to like it, and he died 
shortly in his rule, and Fahd went in in an orderly way. 

Hicke: Early '80s? 

Jungers: Yes, something like that. It was kind of an interesting little 
story that describes the man. 

Hicke: How old is the older generation then? 
Jungers: The brothers? 
Hicke: Yes, well, the sons. 

Jungers: I think the youngest one is Ahmad, who is one of the Sadari Seven 
brothers, and he is either the youngest or one of the youngest. 
He's probably about forty. 

Hicke: He's the same age as the next generation, some of them. 

Jungers: Sure. The old king died in the early '50s and that's about 
right. 



124 



Hicke: So five of the brothers became kings? 
Jungers: Saud, Faisal, Khalid, Fahd. 
Hicke: Oh, four. That's really amazing. 

Jungers: Five members of the family if you count the father, since 1930. 
Is that stability or what? 

Hicke: Well, I think Aramco has some part in that stability. 

Jungers: Sure, success helps. Economic success helps. Governments go 
down in times of economic stress. 



Bedouin Communication 



Hicke: What have we got left? Oh, maybe this is a good time to talk 
about the Bedouin tradition of communicating, I think that had 
some bearing. 

Jungers: Well, the Bedouin, of course, are used to being alone in the 

desert. When they meet another Bedouin they talk. "Did you pass 
a water well on the way down?" "Yes. It's three days from here 
in that direction," and so forth. They talk about things and 
people, and in all of this process they've learned to 
communicate. Communication spreads like wildfire in the country, 
and it's very accurate; they've learned to be accurate. 

Hicke: A piece of news-- 

Jungers: A piece of news goes fast, and it's pretty accurately presented. 
Aramcons, both Saudis and Americans, have learned that, and 
they've become a close-knit group, and when something happens you 
hear it and you hear it promptly, and it's all over, that so-and- 
so died and so-and-so is really sick. 



[Interview 3: August 17, 1992 ]## 



More on Participation 



Hicke: We are going to back up to December, 1971. That was before the 
first participation agreement of 25 percent. You proposed an 



125 



alternative participation agreement? 

Jungers: Yes. We were struggling at the time to define what participation 
was and what it ought to be to best suit the interests of the 
companies as well as the government. Participation was a 
difficult thing to define. Twenty- five percent was simple 
enough, but 25 percent of what and under what terms? True 
participation, of course, meant participation in the decisions 
that were really downstream to which the Saudis were not a party 
and couldn't be a party. That would mean being downstream with 
the Aramco shareholders, who were indeed competitors. It wasn't 
appropriate nor possible for them to share downstream business 
planning and pricing and et cetera with an outside party. 

Hicke: This probably also goes to antitrust laws. 

Jungers: Yes, it could have well been against antitrust laws under most 
conditions. This was a difficult concept to define. It was 
difficult for the shareholder companies to understand what they 
might do. And Yamani had difficulty in understanding why it 
wasn't just a simple matter of 25 percent. At least that was his 
negotiating ploy, but I think it was more than that; he really 
didn't understand the market situation. 

While we were going through these discussions, a number of 
us, particularly me, were interested in trying to get some 
settlement of this issue and trying to get us to lead the parade 
into participation so that we could better guide our own destiny. 
It was at that time that we discussed the possibility of a 
participation which might be as much as 50 percent-- 



Jungers: --in the development of new fields. This had some advantages in 
that we could easily define the value of these fields by the 
amount of capital we had to invest in them. We could determine 
the off -take price --at least based on a known crude with known 
qualities- -and the Saudis could become partners in such a crude, 
certainly upstream, if not downstream. It had some appeal to 
some of the shareholders, as I recall. I floated it, with other 
possibilities, to Yamani in an effort to either get him to buy a 
concept like this or to get him to better understand what the 
problems were . 

My recollection is that Yamani decided that this option 
simply wasn't good enough, that it didn't constitute ownership of 
the company and it wasn't therefore a politically acceptable 
substitute for nationalization. 



126 



Hicke: It probably didn't give him an entree to some of those other 
decisions? 

Jungers: Yes. And I doubt very much that he even so much as suggested or 
discussed that and other ideas with the king. Yamani was 
headstrong, and he had his mind pretty much set on participation 
as the answer to all things. So that and many other ideas didn't 
work, and we ended up with the type of participation that it 
finally was . 

Hicke: So in around February of 1971 you proposed the alternative to 

him, but by December of 1972 there was a general agreement on 25 
percent? 

Jungers: Yes. And it was during that year that we had numerous 

discussions. Yamani felt that we were dragging our heels. On my 
part, I tried to get the shareholders to try to resolve their 
problems more promptly. Finally, of course, we ended up with an 
agreement, or at least an agreement in principle, after a series 
of meetings in Lebanon. 

Hicke: We did go over that part. What happened after that? I have a 
few dates, but maybe it would be better if you tell it as you 
remember it. 

Jungers: Okay, give me the dates. 



Use of Oil as a Political Weapon 



Hicke: At first King Faisal rejected the use of the oil as a political 

weapon. But by early 1973 he changed his mind and in May 1973, I 
have, "King meets with Aramco executives" and from the book 
Economic Diplomacy. "On 3 May 1973 Faisal confided to Aramco 
President Jungers that only in Saudi Arabia were U.S. interests 
relatively safe, but that even in his Kingdom it would be more 
and more difficult to hold off the tide of opinion." And in 
August meetings with Aramco executives, the king began requesting 
that the U.S. government pressure the Israelis to withdraw from 
the bulk of Arab territories occupied in the 1967 war. 1 

Jungers: King Faisal was very cognizant of the importance of oil and of 
the ramifications of trying to use oil as a weapon per se. We 



^.S. David and M.S. Dajani, Economic Policy: Embargo Leverage and 
World Politics 1985, p. 130. 



127 



had many discussions with Yamani on the subject; Yamani 
understood it, of course. But as time went on, the king became 
more and more disenchanted with American foreign policy, the 
blind backing of Israel at every turn. This became almost an 
obsession with him. 1 would get lectures from him on why we had 
to change this and how short-sighted it was and how the Americans 
were driving the Arab world away from the West. 

Hicke: He apparently thought you could do something about it? 

Jungers: Well, sure he did. Aramco to them was all-powerful. He was 
really quite sophisticated. In the very early days, he had 
participated in the founding of the League of Nations in San 
Francisco as a young man. And he was his own minister of state, 
so he was quite knowledgeable on foreign affairs. He had an 
appointed minister who really didn't have full authority and was 
a commoner. So he was really his own minister. 

He understood foreign affairs, but as he became more and 
more disenchanted on the Israeli subject, he became at times 
almost irrational. Not completely by any means, but he became 
obsessed with the idea that Zionism and communism were a 
conspiracy and that they were conspiring together to create the 
Israeli turmoil. This suited the communist needs, according to 
him, whose thesis was revolution; and it suited the Israelis' 
needs, whose only hope was to keep this pot boiling so that they 
wouldn't have to settle with the Arabs and so that they could 
keep the stolen land. He built on this obsession, this idea, 
more and more as time went on. At times, in an effort to make 
him understand that I was passing his message along, that I was 
doing what I could, we would arrange to have him meet with some 
of the shareholders' representatives as well, whenever 
appropriate . 

I remember one meeting in particular; we met him when he was 
in Geneva, and I think that perhaps we were meeting on this 
subject. 

Hicke: I have that executives of parent companies met with Yamani, and 
they brought the king there . 

Jungers: The king was there and we were there having a meeting with 

Yamani. The king told Yamani that he would like to meet with us, 
and he did meet with us, to impress upon everyone that this was a 
serious matter, and he expounded a little bit on the 
communism/Zionism theory. But it was a sincere effort on his 
part to express his views and concerns and to solicit oil company 
help. That was recorded in a number of places, and there were 
four parent company executives there. 



128 



Hicke : I was just going to ask who all was there. 

Jungers: 1 think it was Chuck Hedland of Exxon, and Jones McQuinn of 

Chevron, and Henry Moses of Mobil, and Larry Fulmer of Texaco, 
along with Joe Johnston and me from Aramco. 

Hicke : Who accompanied the king? 

Jungers: The king was there alone for a while, and at one point Amir 

Sultan walked in, who was the minister of defense. The written 
report of that meeting, I don't think referred to Amir Sultan, 
and I'm not sure Yamani was there for the whole thing- -maybe he 
was. If he was, he was not active. The written report of that 
meeting, which was a terse message to the State Department, 
telex- type thing, didn't mention Yamani, I don't think. I know 
it didn't mention Amir Sultan and it didn't mention that I was 
there, but I was. That was the only time, I believe, that he met 
with all four of them together on that subject. 

Hicke: And that was at his request? 

Jungers: Yes. Later on in 1973, the king became more and more agitated 
over failure on the part of Americans to adopt an even-handed 
policy vis-a-vis Israel. He talked to everybody he could at 
every opportunity on this subject, and he was very irritated 
about it. The most important reason was the gross injustice that 
was occurring to the Arabs. Secondly, he saw his position 
eroding, since he was identified pretty much by other Arabs as 
being pro-American, and this made it difficult for him. 

So at one point when I was in Riyadh to see Yamani, I got 
word to see the king, and Majed Elass was with me. We went in to 
see the king, and he was as upset as I had ever seen him on this 
subject or anything else. He lectured me for a long time on this 
problem and the fact that we were doing nothing, the companies 
were doing nothing, and we would live to regret it. It was of 
utmost importance that American business get behind him in this 
problem and prevail upon the government and the people of the 
United States to solve it. The words he used- -and I reported 
them, and they are recorded in various places, because I always 
reported these things very accurately in substance and tone- -left 
no doubt that if we didn't do something, he was going to do 
something with us. This was in early winter, 1973. 



129 



An Attempt to Gather U.S. Support for Arab Nations 



Jungers: Majed and I discussed this after we left his office, and Majed 
agreed and was convinced that the time had come for us to do 
something. We had to do something out of the ordinary to at 
least prove that we were trying. And it was a sensitive matter 
really with the oil companies as a group and for business as a 
whole to be seen as overtly backing the Arabs politically. There 
was so much agitation in the United States by the Israelis that 
business was leery of taking a position. The Jewish public was 
up in arms. But nonetheless, I decided that I was going to go to 
the United States and see as many chief executives as 1 could, 
quickly. 

Hicke: You mean of the oil companies? 

Jungers: Of everybody, and tell them this story, and tell them that 

therefore they had to take an active position to try to move 
government policy on this matter. So within a few days we got 
Joe Johnston, and we had a man in Washington, Jim Knight, to make 
appointments. I saw, I believe it was thirty-eight chief 
executives in a matter of days. Maybe it was more than that. We 
were in New York, Detroit, Milwaukee, San Francisco, Los Angeles, 
Dallas, Houston, and met with them. We had breakfast together 
with Henry Ford and Tom Murphy, the chairman of General Motors; I 
met with the chairman of IBM. We picked the biggest banks and 
the biggest industrials. Aramco did do a lot of business and we 
were able, of course, to see the people from those companies. I 
had never met some of these men even though we did business with 
their companies. Included were General Electric 's Reg Jones; all 
of the banks including Bank of America and Tom Clausen; Walter 
Winston, Citicorp; David Scott of Allis Chalmers; and a large 
group of executives in Milwaukee. Also many oil company 
chairmen. 

Most of the chief executives were aware of the problem, and 
their sympathies were with ours. Many of them made statements in 
newspaper ads and things like this, and they took flak for it, 
just to prove that they were trying to do something. 

Hicke: I read that Mobil, for instance, placed an ad. 

Jungers: Oh, yes, Mobil took a very active role. And Otto Miller, the 
chairman of Chevron, wrote a very strong letter to all of the 
shareholders on this subject. 

Hicke: Did you see it? 



130 



Jungers: Not before he sent it out. He told me he was going to do this 

and he did it. Of course, the reaction was very bad against him. 
They had people attempt to get into Chevron's office building and 
there were all kinds of negative reactions in the press over it. 
Otto Miller took a lot of flak for this. 

Hicke : What was the essence? 

Jungers: Well, that this was an important matter, that oil was important 

to the United States and that this policy was not even-handed and 
supported the Israeli government that refused to settle their 
issues with the Arabs, their neighbors. I don't remember what 
all it was, but it was well done, it was very much pro-Arab and 
it was very much a protest. 



Reporting to King Faisal 



Jungers: We came back to Arabia, and I went to see the king, and I told 

him what I had done. He listened and said, "How did they react?" 

I said, "Well, they reacted very well. For example, this is 
what Mobil did." I was especially careful to demonstrate what 
the shareholder companies did and what their reaction was. It 
was obviously very positive. 

Hicke: What about Exxon and Texaco? 

Jungers: They did things too. Maybe not quite as openly as Otto Miller 

and Mobil did, but it was pro-Arab. In fact, Mobil continued to 
run ads in the paper just to bring up issues. Remember that 
public relations effort they had? 

Hicke: Oh, I remember that. I do. 

Jungers: It was disguised in the sense that it wasn't overtly anti- Israel, 
but it was putting before the public the issues of oil and our 
need for it, the fact that we get it from the Arab world and we 
must be cognizant of this. We all look for alternatives, but 
there really aren't any. That kind of thing, without really 
bringing up the Israeli question too much. 

And the king was very probing about which ones weren't 
cooperative. [laughter] I tried to just simply not answer that 
question. Then he went down the list and said, "I see you met 
with Mr. Ford." 



131 



I said, "Yes." 

He said, "Was he cooperative?" 

I said, "Well, he came to the meeting." [laughs] Of course 
Ford was on boycott at that time. The Arab countries had an 
industrial boycott on countries that overtly helped Israel, and 
this later became part of the illegality as part of the Foreign 
Corrupt Practices Act, where everyone had to demonstrate that 
they were not submitting to such boycotts. In fact, everyone 
went out of their way to sort of say, "What boycott?" 

Hicke: "Me?" 

Jungers: "Me?" [laughter] It was in the meeting with Henry Ford that 
he- -I wouldn't say that he was pro-Israeli, but he certainly 
wasn't in tune with the Arab side of the problem. 

Hicke: If anybody needed oil, he did. 

Jungers: He finally said that he was aware that they had had some problems 
in the Middle East, but he really didn't understand why they had 
to knuckle down to the Arabs on this. I said, "Well, Henry, have 
you ever been to the Middle East?" 

He said, "Yes, I have." 



he 



I said, "Where?" Well, Israel. That was the only place 
'd been. I said, "You ought to go to some other places." 



"Like where?" 



Do you 



"Like Cairo, like Jordan, like Syria, like Arabia, 
know what you would find there?" 

He says, "What?" 

"You wouldn't see one Ford automobile. Not one." 

He says, "That's baloney." 

I said, "It's not baloney. Wherever you are hearing that 
there are Fords there you are getting baloney from your 
organization." This was really, I think, the first time that he 
ever really got into this issue. He didn't do anything about it. 
He asked me while I was still with Aramco before the Foreign 
Corrupt Practices Act to advise them how they might get off the 
boycott. I said, "There's nothing I can do about it." 



132 



Hicke: 
Jungers : 



Hicke: 

Jungers: 

Hicke: 
Jungers : 



You had already advised him. 

Well, once you were on, it was difficult to get off. Now you are 
trying to prove that you quit beating your wife. This is a hard 
sell. [laughter] So people didn't get off of the boycott very 
often, even when they tried. 

But anyway, the king did get out of me who was the most 
cooperative and who were the least cooperative. And this trip 
got a lot of bad press for me and for Aramco as well. I think a 
lot of people, including some of our State Department friends, 
thought it was a poorly advised move on my part. 

Well, do you want to talk about the State Department? You had 
just gotten back from your trip and you said that the State 
Department was not pleased or the government. 



Oh, the government. And I reported, of course. 
I reported to the ambassador. 

Who was the ambassador? 



What had gone on 



I think it was [James E.] Jim Akins at that time, who happened to 
be very much in tune with the problem and very understanding of 
the Arab problem on this whole issue, not out of preference, but 
because he understood the oil problem. 



Beginnings of the Boycott 



Hicke: I want to discuss the OPEC meeting in Vienna and the abduction of 
Yamani . Are we up to that? 

Jungers: No, no, we're not. I think the boycott is probably first. 

Hicke: Yes. Well, that's true. This OPEC meeting I'm talking about was 
in October. I have October 12 the chairman of the board of 
shareholders sent a private letter to Nixon- - 

a 

Hicke: --which said, "Further support for Israel will produce a major 
oil supply crisis." Then on October 18, Faisal announces a 
decision to reduce oil production by 10 percent. Is that where 
we are , about? 

Jungers: Yes. Well, just after the trip to the States, the pressure 



133 



increased in the Arab world against the United States. The king, 
through Yamani, would keep reminding us that this situation was 
getting worse and that he couldn't sustain the pressure. 

Of course, every time this subject came up, I reported it 
carefully, in word and in tone and in degree of urgency, to the 
shareholders. That's what precipitated their letter to the 
president and other actions. They made many trips to the State 
Department in Washington at various levels to discuss this issue 
and to discuss the probability of drastic action on the part of 
the Saudis, because I was convinced that something would happen. 
I finally was convinced it would be a boycott. By my reporting 
of the actual contacts, I think the shareholder companies were 
convinced and did everything they could to try to get support. 
But we got precious little support. Jim Akins as an ambassador 
very likely was relieved because of his outspoken reporting and 
views that he sent back to [Henry] Kissinger on this issue. 

Hicke: When did that happen? 

Jungers: It was shortly after all of this. He was very unpopular with his 
boss and was very outspoken about his boss's failure. 

So finally, one day, the king mentioned the boycott. Didn't 
say that they were actually going to do it, but I was convinced 
that he was, in effect, telling me that there would be a boycott. 

Hicke: He actually talked about what they might do? 

Jungers: Not clearly, until finally, at a later meeting, I told the king 
the last time I met with him about this subject that I didn't 
think the boycott would be effective. He didn't say anything. 
Finally, when they had made the decision, Yamani called and said 
that there would be a boycott and that it would be effective from 
such-and-such a period. I said I didn't think they'd be able to 
do it. 

He said, "Oh. yes. We've discussed that. We'll be able to 
do it because you are going to do it." 

Hicke: When you say boycott, are you talking about the first 10 percent 
cutback? 

Jungers: Well, it was a cutback, but it developed to be an actual boycott 
against certain countries that were pro- Israeli. 

Hicke: Okay, so this was a kind of a gradual move? 
Jungers: First there was a 10 percent cutback. 



134 



Hicke: And that's what he [Yamani] announced? 

Jungers: That's what he announced, and then we were called In and, "It's a 
boycott." At the head of the list were the Netherlands, the 
United States, and so on. Then there were degrees of boycott. 
It got more and more complicated as the countries who were 
boycotted or who were about to be boycotted made their way to 
Saudi Arabia and pled their case and the degree of the boycott 
changed. We were given day-by-day instructions of what the 
boycott order was and who could buy what. 

So we had to develop an iron-clad system that told us more 
than just who lifted the oil, because we knew the tankers that 
came in and whose tankers they were, but that didn't tell you 
where the oil went, necessarily. And the oil could have been 
trans-shipped and could have gone to certain refineries that 
shipped products to the boycotted countries and so on. So we set 
up a system that determined where the oil actually ended up, 
every barrel. 

Hicke: You mean after it was refined? 

Jungers: Yes. On a balance basis, we knew exactly where every barrel of 
oil that was exported went, and monitored it. This was under 
threat of complete nationalization. There was no doubt about 
this. And we did it in lieu of being nationalized. We had no 
choice . 

Hicke: I read that when Faisal announced the first 10 percent cutback, 
you decided to double that. 

Jungers: Yes. Since we didn't have a system, we decided we would cut back 
more to be sure that we were well within the bounds . Because 
there was oil at sea, and we didn't have a system of really 
knowing where it went exactly, couldn't prove it. Therefore I 
had to make sure that we were well within the order, and until we 
could be more precise, we cut it back more. 

Hicke: Did you have to lay off people? 
Jungers: No, we didn't lay anybody off. 



A Summons to Washington 



Jungers: After the boycott had been in force for a period of time, pretty 
early on, it developed that a lot of the oil that had been going 



135 



to the United States was, in fact, going to the U.S. military, to 
the navy at sea. The boycott became a matter of concern, of 
course, to the navy. The defense department approached the 
shareholder companies. It was then a secret that the navy needed 
oil (it's no longer secret) and I was asked by the shareholders 
through Joe Johnston to go to Washington to the defense 
department . The boycott was a problem and they wanted to talk to 
me about it. 

So I went to see James Schlesinger, who referred me to Bill 
Clements, who was the deputy secretary of defense and later 
became governor of Texas. I knew Bill Clements when he was 
majority owner and chief executive of Sedco Drilling Company, so 
we were acquainted. We discussed the problem. They wondered if 
there was any way that I could prevail upon the Saudis to do 
something about the boycott, because the [American] government 
really didn't want to go in at a high level and officially 
negotiate if it could be avoided. It would be an awkward 
situation. They wondered if there was any room at all for me to 
negotiate a change some way. 

Hicke: As a special plea for defense? 

Jungers: For oil for the navy. So I went back and thought about it. I 
knew what the requirements were, because Bill Clements had told 
me what they felt they needed to maintain their position in the 
Far East and the Middle East. So I thought about it and we went 
to see the king, Majed and I. I explained to the king that this 
was a real problem and I understood his thinking, but if and when 
there was a shift in the Israeli policy of the United States, it 
certainly couldn't happen tomorrow. He was certainly aware that 
diplomatically these things took some time and that this was a 
matter that was much more urgent and could be of serious 
consequence to the Middle East if not to the kingdom. 

The king listened carefully and he said, "Are you telling me 
that this approach to me is not instigated by the oil companies?" 

I said, "No, it's not." He well understood then that while 
I wasn't a designated emissary from the U.S. government, that was 
where it had come from. 

So he said, "Well, I really don't know how you are going to 
do this." And he said this in such a way that led me to believe 
that he wouldn't make an issue of it. 

Hicke: That it was up to you? 

Jungers: That it was up to me and "God help you if you get caught, or if 



136 



Hicke: 
Jungers : 

Hicke: 
Jungers : 

Hicke: 
Jungers : 



Hicke : 
Jungers : 



Hicke: 
Jungers : 



Hicke: 



Jungers : 



it becomes a public issue!" [laughter] 

Get your sword and run yourself onto it. [laughter] 

So it was a non request of a non event. He couldn't agree to 
this . There were not many people who were privy to how the 
boycott worked, exactly. 

Those figures you developed? 

The figures that the Saudis gave us were secret; they didn't 
allow us to tell those to anybody, and they changed all of the 
time as their diplomatic situation changed. And so they were 
secret. 

And how about your figures? 

Our figures, the way we arrived at which ships could go where, 
were secret. The system was so tight that nobody could breach 
it. We would know immediately if it was breached in any way. 
Now, the question was how to circumvent this system [laughter] 
without anybody that was involved in it knowing that we were 
circumventing it. 

How many people had access to both of these numbers? 

Not very many. Some of the people who had access to some parts 
of this system were off -taker companies that were owned by the 
shareholders, so this was a carefully crafted system. 

Anyway, we did figure out some ways to do this, and it was 
done . 

And it made everybody happy? 

Everyone was happy and not a word was ever said and it was, of 
course, a secret thing for years afterward. It came out later. 
But after the emotion and international scrambling of the boycott 
subsided, it became an important but interesting part of a big, 
involved boycott. 

[someone arrives; tape interruption] 

Okay, so the first 10 percent cutback was in October of '73 and 
there were other cutbacks going on in various other areas? 

Well, following that overall 10 percent cutback, then the boycott 
became country-specific. Then it wasn't a percentage at all, but 
it was country- specif ic , and the amount of cutback to each 



137 



country was specified by the government, 
at their direction. 



We just implemented it 



Participation Increases 



Hicke: 



Jungers : 



Hicke: 
Jungers : 



Hicke: 



Jungers ; 



Hicke: 
Jungers : 



In 1974, the percentage for participation went up to the next 
level. 

Yes. That's when we went to 60 percent, and it was a series of 
negotiations to get to sixty. And of course always involved in 
these negotiations was, what is participation? How do we now 
define it? What do the shareholders get for giving up additional 
interest? 

What did they get? 

Well, it varied. Each time we made a move, we changed the 
arrangement somewhat. The final arrangement for 100 percent 
included an overall cash amount and an ongoing fee to the 
shareholders for their providing technology that Aramco requests. 
This ongoing fee is paid depending on production. 

Did the next participation negotiations help alleviate the 
boycott? 

No, that had nothing to do with the boycott. It was ongoing 
because of certain nationalizations that had taken place in the 
Middle East. Now Yamani's argument was that, "Well, in order to 
try stop this pressure and to take the pressure off of us to 
nationalize, we've got to have more than 50 percent to be in 
charge of our destiny." Then it got to 60 because somebody else 
was threatening to do the same thing for 55 or something. 

Here is the leapfrogging again. 

This is a leapfrogging problem, real or imagined. So we ended up 
with 60 as being the next step. Then, of course, it finally was 
100. 



138 



More About the Boycott 



Hicke: Meanwhile back in '73 Egypt attacked Israel. 

Jungers: That's right. All I'm trying to remember is was the boycott 

prior to the attack or after? Well, I don't think it affected 
the boycott as such, one way or the other. 

Hicke: But I did read that Faisal was consulted about this attack by 
Egypt. 

Jungers: Well, yes. I'm sure he was. But not through us. 

Hicke: Oh, of course. Because we were discussing international 

political issues, what I need to ask you is what the effect on 

Aramco was . 

Jungers: Well, the war did not last very long, and the subsequent defeat 
of the Egyptian army was only possible because of a massive 
airlift of supplies into Israel by the U.S. government. It just 
heightened the tensions. Also it demonstrated that the American 
government was not even-handed. As a matter of fact, when this 
airlift was taking place, I don't think the public had been 
consulted; this was just done. 

Hicke: Yes, I read somewhere that Israelis didn't realize how poorly 
supplied they were and what an emergency would do to them. 

Jungers: This is part of the myth of the Israeli armed forces' might. 
They had none to speak of without massive aid. 

Hicke: They had the U.S., right? 

Jungers: That's it. They have the equipment that we give them; they don't 
buy it, we give it to them in doses of billions of dollars worth. 
It was during this period that Bill Chandler, who was the 
president of Tapline, wrote an article. I'm going to look for 
it. It was titled, "Israel, the 51st State" and it presented the 
premise, which was quite true and plausible, that if we made 
Israel a state, it would cost us a lot less and nobody would 
attack the 51st state and we wouldn't have to throw them all this 
money. Of course, they would refuse because they'd want the 
money. As a state, they wouldn't get any kind of aid. They'd 
have to stand in line with the Detroits and Los Angeleses of this 
country and beg for money like everybody else. Here we treat 
them better than we treat our own Americans, on a per capita 
basis. The article caused a lot of fuss in a lot of places, but 
it was a well -written article and there was a hell of a lot of 



139 



truth in it. The Israeli press and the American press was up in 
arms over the oil company kowtowing to the Arabs like that. 

Hicke: Where was it published? 

Jungers: Oh, it hit the press all over. In fact, I think Bill Chandler 
saw to it that it did. Bill became very active at that point. 

Hicke: Well it's obvious, I think, that this reinforced everybody's 

opinion about the standing of the United States, so where does 
the embargo then go? What happened? 

Jungers: Well, the embargo itself didn't last that long, and I'm confused 
now whether it occurred before or after that war. 2 

Hicke: Yes. And the part I remember personally was the Japanese role. 
Jungers: Well, of course. 

Hicke: Does that have something to do with the pricing, too, or was that 
just the embargo? 

Jungers: Well, it was the embargo. 
Hicke: So it was felt. 

Jungers: Yes, it was. It was felt. As a result, of course, I was 

approached by everyone in the media to comment on whatever there 
was to comment on, and I became a media person. 

[phone rings; tape interruption] 

Jungers: Just to sharpen up some of the dates that we are fumbling with 
here, some of them are in the Business Week article of December 
15, 1973 in which I was interviewed by Business Week. This isn't 
exactly accurate in that it says, "Since Saudi Arabia's austere 
and shrewd King Faisal ordered a 25 percent cutback from 
September production levels..." Initially it was 10 [percent] 
and then the cutbacks occurred by country. There wasn't a 25 
percent ordered as such, but it added up to 25 [percent] when you 
added up the countries at this particular time. 



2 . Egypt and Syria attacked Israel on October 6 while the oil 
companies were in Vienna negotiating with OPEC. The negotiations were 
unsuccessful, and the Gulf states unilaterally raised the posted price to 
$5.11 a barrel shortly afterward. On October 20, Saudi Arabia embargoed 
oil shipments to the U.S. 



140 



"...ordered this cutback after the outbreak of the Yom 
Kippur War. Jungers and top officers have been confronted with 
the awesome job of dividing up 6.2 million barrels a day among 
Aramco's customers rather than 8.3 million. Since many of 
Aramco's customers are also its owners, the chore becomes even 
more sensitive. Originally the sole property of Standard Oil of 
California, it now is owned by the four. The ownership 
percentages were changed by the Riyadh agreement signed early 
last year under which Saudi Arabia and other Persian Gulf nations 
demanded and got a 25 percent interest in the various companies' 
operating concessions in their countries." That was early in 
1972. 



Jungers: "...At Aramco, Jungers negotiated with the Saudi government on 

the issue of participation, meaning a share in the equity of the 
company, handed them a letter in March, '72, indicating Aramco's 
willingness to discuss the Saudis buying a share. The letter 
said we had a participation deal and now we had to negotiate it. 
The four shareholder companies took over the negotiating at that 
point because we didn't feel that Aramco should be negotiating 
for the four partners against the fifth. When the final terms 
were drawn up, the Saudis took a 25 percent interest in Aramco 
that reduced the ownership of the U.S. companies to 22.5 
[percent] each for three of them and 7.5 [percent] for Mobil. 

"The Saudi interest was to increase annually until it 
reached 51 percent by 1982, but everyone in the Middle East 
agrees this portion of the agreement is already dead. Libyan 
strongman Moammar Qaddafi nationalized 51 percent of Exxon's 
wholly owned Esso Libya in early September; tiny Abu Dhabi 
abrogated the 25 percent agreement this fall; and this week 
Kuwait, whose popularly elected national assembly never ratified 
the agreement, announced plans to assume 60 percent of ownership 
of Kuwait Oil Company, hitherto shared by Gulf Oil and British 
Petroleum. The Kuwaiti action increased the pressure on King 
Faisal to take an equivalent or stronger action. Saudi Arabia 
has been dickering for months with Aramco on revision of the 
Riyadh accord and Saudi Oil Minister Sheikh Akhmad zaki-Yamani 
emphasized in New York this week that a 51 percent share is not 
satisfactory..." and this is the leapfrogging we were discussing. 

"In London, the center for Middle East oil watchers, the 
betting is that Faisal will eventually demand 100 percent 
ownership." Of course, that was a foregone conclusion. And, as 
it explains here, as this ownership change occurred, the Aramco 
owners became not producers of oil but buyers of oil. So 
therefore the ownership question became more and more a moot 



141 



point, really, it was just a matter of terms, 
going to be buyers of oil. 



Aramco owners were 






Hicke: Didn't that put you in a strange position or a shifting position? 

Jungers: Well, yes. I had five shareholders and four of them were 

tremendous customers and the fifth one, Saudi Arabia, had a 
company called Petromin, whose head, Dr. Abdul Hadi Tahir, was 
also on our board. They were a purchaser of Aramco oil for 
internal use. So I had five owners and one more customer and so 
on. 

Hicke: And the power structure was shifting all of the time? 

Jungers: Well, yes. Let's just read another: "Since then, the companies 
have been moving beyond their preferred tactic of behind-the- 
scenes lobbying in Washington. They are publicly calling for a 
shift in the U.S. traditional pro-Israeli policy in statements 
aimed at American public opinion and at the ears of Faisal, who 
views himself as a leader of the Arabs. SoCal chairman Otto 
Miller sent a letter to his shareholders urging them to take the 
Arabs' case into account, and both Texaco chairman Maurice 
Granville and Exxon chairman Ken Jamison have made the same 
point, somewhat more obliquely, in public speeches. The fourth 
partner, Mobil, has also called for a re -examination of U.S.- 
Middle East foreign policy in advertisements." So this was a 
result of the trip. 

"But while the U.S. shareholders of Aramco have been 
speaking out in public, Jungers is quietly continuing Aramco 's 
excellent relations with the Saudi government and the people. 
The owner companies bore the brunt of Faisal's displeasure during 
the '60s when the Saudis were begging Aramco to increase 
production and hence national revenues. 'Our production rose as 
fast as anyone else's, but the market just wasn't there,' Jungers 
recalled. 'The Saudis were pressuring us to set up production 
intending to blame the shareholders for holding it down.'" 

Hicke: Was that actually the case? 

Jungers: Yes. We didn't cover that problem. Back in the '60s, in 

addition to the problem with price as a source of revenue, the 
total world production capability was higher than needed, because 
oil had been discovered in new countries and each country wanted 
their production to go on; they all needed money. The Aramco 
shareholders were present in other countries as well --not as one 
group, but individually they were present in many countries and 
in different participating interest percentages. So they had 
different percentages, different reasons, differing profit 



142 



Hicke: 
Jungers : 

Hicke: 
Jungers : 



Hicke: 



margins in these various countries. And each one of these 
various countries had different grades of crude, which would in 
some cases fit a refinery of one company but not of the other. 
And on and on. 

These refineries were constructed in accordance with the 
market demands in the countries they were constructed in. So in 
some countries, one of the shareholders would be stronger than in 
others and so they had differing needs in those countries. 
Therefore it wasn't a foregone conclusion by any means that they 
were going to lift all of the Aramco production that we had or 
that they would lift it because the Saudis wanted it lifted. 
They all recognized that Saudi Arabia had a lot of capacity and a 
lot of potential for more and therefore was a very valuable 
property. They gave that significant weight in their decision- 
making as to where they were going to lift the oil from, but this 
was a juggling act to keep all of these countries happy; all of 
them needed money, and we had to run the business (they did and 
therefore we did) as businesses are run, for profit. The thing 
was a bag of worms. 

I believe that. 

Everybody knew that the day would come when we would need all of 
it. We didn't know what the day was, exactly, but we knew. 

Oh, yes. 

And so this whole thing- -the pricing plus this problem I just 
alluded to and all of its complexities- -was what caused OPEC. It 
subsequently also caused a call for participation, because Yamani 
and other oil ministers thought that by participating they'd 
understand this marketing problem better. Of course, they [the 
companies] weren't going to get into the marketing problem with 
them [the oil ministers]; they couldn't. 

Yes, there was mutual suspicion but they couldn't allay it 
because of the-- 



Jungers: --because of the complexity and of the laws and of everything 
that was involved. It was impossible to bring them into the 
picture. They [the companies] were all willing to become buyers 
of oil first, before they brought them [the countries] in. 
They'd go that far, if necessary. And they did, by giving 100 
percent participation, and worked things so that the profits 
occurred downstream. 

Hicke: Well, there's at least three major tracks that I've got here. I 
want to know how the embargo ended, then I want to talk about the 



143 



major price rises in the '70s, and then your feeling towards the 
media. 



Easing of the Boycott 



Jungers: Yes. Well, the embargo gradually ended as the tensions of the 
war subsided- -of the war that had already ended. As these 
tensions subsided, the countries gradually, diplomatically, made 
their way to Riyadh and papered over the problems and somehow got 
off the boycott list. I don't recall which countries got off 
first and how come and at what rate. You could make a doctoral 
study out of this. You would learn a lot of things you couldn't 
use . 

Hicke: But apparently Faisal also somehow realized that this was not 
going to be something he should stick to? 

Jungers: No, he was a pragmatist, and while he was angry during the 

period, he realized that diplomatic changes do not occur quickly. 
To the day he died, he still had the communist/Zionist conspiracy 
theory that he believed in quite heavily, but he became more 
stoic about it. 

Hicke: That opened you to a sort of a single simplistic solution or 

mental attitude. If this is the problem, and he's got his eyes 
fixed on it, then you can solve it-- 

Jungers : --by simply cutting them off from Saudi oil. 

Hicke: Yes. 

Jungers: Well, but that wasn't possible. 



Learning to Deal with the Media 



Hicke: Let's go back to this media blitz that was occurring. 

Jungers: Well, the media knew of the boycott. While everybody knew that 
there had been this cutback, nobody knew exactly which countries 
had been cut back and how much. Of course, this was a shifting 
number all of the time, so even if we could have told the media, 
which we were forbidden to do by the Saudi government, we 
wouldn't have told them, because the number would have changed 



144 



anyway, by the time they got it. So nobody knew these numbers 
and nobody really understood what had gone on. We were under 
wraps from the Saudi government on most points and on those that 
we weren't, we put ourselves under wraps. Because to try to 
explain things only would lead you to the next question, which we 
couldn't answer. So we just treated it as none of their 
business, sort of. 

Everyone was trying to find out what had happened and 
usually it took the form of attempting to accuse me of being 
anti- American and having cut off my own country from oil. That 
was the media approach. 

Hicke: So they challenged you? 

Jungers: They challenged me. They all came to Arabia and begged us to 

sponsor them because the Saudis wouldn't let them in. [laughter] 
We tried to selectively do that, which didn't help us any, 
really. Although some of the publications like Business Week and 
Fortune and James Tanner of the Wall Street Journal and so on did 
present balanced articles that reported what they could report as 
fact. Unfortunately, even some of the good writers didn't get it 
right- -maybe deliberately didn't; maybe didn't trust what I said; 
maybe were trying to get a spectacular article. 

Then we were being pestered by the television media to let 
them in. Mike Wallace wanted to come in and so on. So at that 
point, I decided, along with Joe Johnston- - 

[phone rings; tape interruption] 

Jungers: We decided that since he, in New York, was being pestered by the 
media and that I was too, that we had better find somebody to 
help us, prep us a bit on how to handle the media. So Joe 
Johnston found a course that was being given by the public 
relations company, J. Walter Thompson, in Chicago. He and I 
attended a three -day, concentrated course on how to handle the 
media. This was a very, very good course. When we got there, 
they had done their homework. They knew all of the background of 
the boycott and so on. 

The course started with a couple of media people who were 
grilling me individually and Joe individually on what had 
happened. They took a hostile position, and this was being 
recorded on TV tape. It obviously was a subject that I was very 
well acquainted with, was current on, and I thought I had done 
well. They played it back, and my performance was just awful. I 
was terrible, and Joe found the same thing. You don't come 
across like you think you came across. Your own judgment of how 




Mike Wallace, Ahmed Lughod, Maj id Elass , and Frank Jungers , circa 1973. 




Aramco Board, November 1973. Back row: Jones McQuinn, Chevron; Ed Zinola, Aramco; 
Herman Schmidt, Mobil; J.J. Johnston, Aramco; Brock Powers, Aramco; A.C. DeCrane, 
Texaco; Kay Ingram, Araraco; T.D. Collier, Aramco; George Keller, Chevron; W. MacDonald, 
Mobil. Front row: Henry Moses, Mobil; C.J. Hedlund, Exxon; Abdul Hadi Taher, Gov. 
Petromin; Frank Jungers, President; George Piercy, Exxon; Listen Hills, Chairman; J. P. 
Lunde , Aramco . 



145 



Hicke : 
Jungers : 



Hicke: 
Jungers 

Hicke: 
Jungers : 



Hicke: 
Jungers : 



Hicke: 
Jungers : 



you appear to others is usually not very good, 
proceeded to-- 

Af ter opening your eyes . 



So then they 



After getting our attention, they proceeded to take this apart 
and to teach us some of the true ABCs of handling yourself on TV 
and on radio. They did the same kind of thing on radio, and we 
were just awful there too. [laughter] They had Sandy Vanocher 
there, who was assigned as sort of my mentor, and then at the end 
of the course, Sandy Vanocher conducted an interview on the same 
subject. It was not blatantly hostile, but it was a very, very 
difficult interview. 

Challenging? 

A challenging interview from a man who had done his homework and 
asked very penetrating questions. It was a remarkable 
metamorphosis. Still not a budding Ronald Reagan or anything, 
[laughter] but I was a lot better. 

Not a "Great Communicator" but at least a good one. 

Right. There was some real meat, of course, and real reminders 
about your own personality and because you've got the kind of 
personality you have, you really ought to do the following 
things. But in addition there were some just plain dos and 
don'ts. First of all, don't ever agree to go on the media unless 
you have a reason; you don't go on because your ego says to or 
because you are flattered that somebody asked you to go on TV; 
that's not a reason. Don't think that you are going to somehow 
"wow" them. 

It's not going to work? 

It's not going to work. One of the techniques that they espoused 
was called "bridging"--! guess it was a media advertising term. 
You only go on because you have a message, and you think that by 
going on you can send this message better. Therefore, you don't 
want to be and should never be, distracted from your message; 
never be distracted from your message. You don't have to answer 
a question, you don't get involved in anything except what you 
want to be involved in, and when someone asks you, "What happened 
when so-and-so so-and-so?" "I'm glad you brought that up," and 
then you "bridge" yourself back to your subject again. 

This is bridging? 

This is bridging. And the people that bridge well, it's very 



146 



clever and it's hardly noticeable, but they never answer the 
question unless they have to. At that time, '73 or '74, they 
showed us tapes of the two most accomplished nonprofessional 
media people on the subject of bridging, and they were George 
Meany and George Bush. They were both superb. If you didn't 
realize what they were doing, you wouldn't notice it. And they 
handled it in different ways, they were different personalities: 
Meany was a rough, tough guy, seemingly uneducated, seemingly 
unable to speak well and all of this. But he spoke very well and 
he never got off his subject, ever. [laughter] Bush was the 
same waymuch smoother. 

Hicke: Had they been trained? 

Jungers: Don't know. You watch George Bush. He's dynamite in a debate 
situation, or these contrived debates. You are not going to 
catch him on anything like that. He'll make mincemeat out of 
anybody. And he'll do it as a kind of a slow, easy, no razzle- 
dazzle. It's just he's on the subject and he stays there. 

Hicke: Did you find that easy to do? 

Jungers: I found it quite easy once you realized what it was that you had 
to do; once you realized that "this is my subject," and you just 
don't allow yourself to be distracted from that. They showed us 
techniques that media people use to get you off stride, to break 
your concentration, and to try to cause you to make some mistakes 
so they have something to yap about and something that "makes the 
show." Things like you sit down and, "Would you mind 
straightening your tie? And lift this shoulder a little higher 
so you can make a better picture, and turn a bit, would you 
please?" Next thing you know, you are just plain uneasy about 
how you look and "Why is he asking me to turn? Didn't I shave 
this morning?" [laughter] 

And, "You're speaking too softly. Could you speak a little 
louder please?" If you fall for that gag- -I don't know if we 
ought to be recording all of this stuff --if you fall for that, 
[raises voice to a high pitch] you are talking in the wrong voice 
and you're not coming across at all, really [returns to normal], 
you're looking and are ill at ease and insincere. If you are 
speaking too softly, tell them to turn their volume up. If you 
want a picture of this side, move your camera. They want the 
interview, they want the pictures, they move. You stay where you 
are, you keep your mind on what you're doing, and you do it. 

Hicke: Now is this the kind of thing Yamani was good at? 
Jungers: Yes, he was good at it and very photogenic. 



147 



Hicke: It sounds like one of those things you told me about. 

Jungers: Well, you can say those are obvious things. Yes, they are 

obvious, especially when it's pointed out to you. They weren't 
obvious to me . There were many of these kinds of things that you 
learned, and it just sharpened up your presentation. 

Hicke: Was this before or after the CBS "60 Minutes"? 

Jungers: It was before. So Mike Wallace came to Dhahran and spent days 
there . 

Hicke: Following you around? 

Jungers: Well, we'd send him around to all kinds of people. We sent him 
to some Arabs to demonstrate to him that we do have good Arabs, 
Arabs are people, which the Zionist Mike Wallace didn't believe. 

Hicke: He had preconceived notions? 

Jungers: Oh, he's a real Zionist. And of course he's looking for a 
mistake. I saw a tape that Wallace had done of the Shah of 
Iran- -the Shah had let him in. First of all, what you find out 
is he interviews you for hours on end and promises that he'll 
give you a copy of the tapes. I've never gotten them and I've 
written him I - don ' t -know -how -many letters; I never have gotten 
those tapes. What got on the program was about three minutes, 
selected by him. I came across okay; he just didn't have 
anything on me, and I never let him get me onto something he 
could make a big deal out of, because I had everything to lose 
and nothing to gain. I can recall seeing the Shah of Iran on TV 
on the Mike Wallace show where he was questioning his 
truthfulness, really-- 



Jungers: --questioning his truthfulness and giving him very little footage 
to explain himself but zeroing the camera in (with hot lights) on 
his face which appears with sweat pouring down and the eyes 
looking shifty. The picture gives the impression that he's 
obviously lying. 

Hicke: They had made him so uncomfortable that he looked uncomfortable? 

Jungers: Yes. I'm not defending the Shah of Iran at all, I'm just saying 
that this is what can happen to you. So I was careful where we 
had the interviews and when and how long they lasted. 

Hicke: Did you see the show? 



148 



Jungers: Yes, it was a non show. [laughter] And that was perfect. You 
can't win in this game, you can only lose. But it did do me a 
lot of good in magazine articles and things that came off, most 
of them, not badly. They are pretty balanced, considering 
everything. And you do that by keeping your mind on what you are 
saying. Don't let them get you into an extraneous conversation 
on something that they can make a one -sentence quote of 
somewhere. Just stick to your message. All business and get it 
over with as quickly as practicable. No "buddy" feelings; he's 
not your friend, he's trying to do an article. 

But at the same time, and seriously on this media thing, we 
did conduct ourselves that way, but the reason that we did let 
ourselves in on some of this was that we believed we should give 
them a balanced view and be fairly open with them, and when we 
got to a point we couldn't talk about, just say, "I can't talk 
about that, let's get on with the next question." They 
appreciated frankness and you tended to get a better article. 
Instead of saying, "I'll give you five minutes," or "Come back 
tomorrow," and duck them- -it doesn't work. 



The Kidnapping of Yamani. Vienna. 1975 



Hicke: Where does this abduction of Yamani fit into things? 

Jungers: It's an anecdote, I guess. Yamani and I spent a lot of time 

together, needless to say, and for one reason or another at times 
we used the company plane together, and later on, after 
participation, we more or less assigned a company plane to him. 
He was at the OPEC meeting in Vienna, and they frequently met in 
Vienna. I wasn't present and I was rarely present. I was not 
present at the OPEC meetings, but I was present in town sometimes 
when we were on a subject where Yamani might have felt that I 
could help him. In this case, I wasn't present in Austria at 
all, and he had the company plane with him. 

We got word that they had had this shooting. Terrorists had 
gotten into the conference center where they were holding the 
OPEC meeting and had killed some people and had abducted Yamani 
and a couple other of his people and some of other nationalities, 
all of whom were significant people. I got a call from our 
airplane, which was on the ground, and the captain on that plane 
said that this group had been abducted and they were putting them 
in an airplane commandeered from one of the airlines and he 
didn't know where they were going to go. Did I have any 
objection to him just following them? We had a G-2, which was as 



149 



Hicke : 
Jungers : 



Hicke: 
Jungers ; 

Hicke: 
Jungers : 

Hicke: 

Jungers 

Hicke: 



fast or faster than any commercial airliner and had the range of 
a commercial airliner. So our plane followed him. Nobody knew 
this; he was far enough back that he'd listen to the radio and 
stay with him. 

They landed in Algeria, I think, and after a series of 
negotiations he was released and was very much relieved to see 
our plane sitting on the tarmac. 

It was right there waiting for him? 

It was waiting. [laughter] He got on and got away. He was 
abducted by a terrorist by the name of Carlos; no one really knew 
who was paying Carlos. Yamani had many stories to tell about 
this. Carlos had him and they were undecided what they were 
going to do. They were sweating him and he would say to Yamani, 
"You're my superstar. I'm going to use you!" He really did it 
to him psychologically, as you can well imagine. When Yamani got 
back to the Kingdom, Yamani was convinced, and I think 
justifiably so, that Carlos would get him again somehow and for 
some reason. So he asked for and got from the king permanent 
security protection when he was traveling or at home. That 
security was provided by a British commercial firm, and so these 
guys were with him wherever he went from then on. That was 
another reason we assigned a plane to him, because they'd fill 
the plane with security people, so he had a need for a plane. 

Why did they let him go? 

It wasn't really clear just what happened. The Algerian 
government negotiated some with the terrorists. Then there was a 
world- wide manhunt on for Carlos and they never have found him. 



I think I've read about that, 
wanted him either, right? 



It was never really clear why they 



No, it wasn't clear who and why. Maybe it was just Carlos 
deciding, "I'll kidnap him and see if I can market him." I don't 
know. 

Venture capital? 

Yes. Entrepreneur. But it was a scary thing. 

I should think he would have been very, very grateful to the 
company. 



Jungers: Of course. We were genuinely concerned about him. 



150 



Inflation of Oil Prices 



Hicke: Is it time to get into the pricing? 

Jungers: Yes. The pressure on prices occurred in the early '70s- -probably 
the real pressure on price began to be felt, urgent pressure, 
about 1970. There was always pressure, and I explained 
previously this posted price problem. But the pressure goes back 
to needing more revenue and back to the idea that "You are either 
going to lift more of our oil or we are going to raise the 
price." It was all wrapped up in this. 

In the early '70s, the producing governments began to feel 
that demand had tightened, demand versus production. Prior to 
that time, there was too much production capability. Yamani 
began to put pressure on us to raise our prices. In his usual 
tactic, "Please do this before we get leapfrogged. I don't know 
where I can stop it then." 

Hicke: So he wanted to be the first? 

Jungers: The first and the most. At one time, at the start of this 
process, we were riding in the airplane together, and he 
virtually assured me that if I could get him 9C on top of the 
$1.80, he could hold the line in OPEC. I believed he was sincere 
in what he was saying, but I couldn't get him to tell me, nor 
could I dream up enough reasons as to why it was 9C and why the 
9C really would hold the line. That was the weakness in my 
trying to get the shareholders to agree to this, and therefore 
they didn't agree. I could only say, "If we don't agree it is 
going to get worse," and that was a pretty weak argument, really. 
I knew that, but I still tried to present what had been told to 
me in the manner in which it had been told and tried to make it 
something that they might have believed had they been there, 
something that they would have seen like I saw it, even though I 
couldn't verify it. 

And I pushed for the increase, because I kind of felt that 
we were going to get jumped anyway. Maybe it wouldn't hold the 
line, but even if it didn't, what harm would it do? Of course, 
the shareholder view was, "He talks about leapfrogging and now we 
are going to get leapfrogged." Their argument was plenty strong; 
and it was their nickel and they didn't allow me to do this. 

Hicke: We are talking about, now, the price at which they buy it from 
Aramco? 



151 



Jungers : Yes , and the price at which Aramco accounts to the government and 
pays taxes and royalties. We went through, at that point, a very 
long series of discussions with Yamani--! did, mostly. Some of 
the shareholders came up from time to time and they discussed it 
with him too. Ve tried to find some way to stop this thing and 
tried to convince the Saudis that it wasn't really in their 
interest to run prices up early, but at the same time we didn't 
give in either. So there were meetings in Tehran that all of the 
Aramco companies and all of the companies in the consortium 
attended. Iran had also demanded price increase and so had a lot 
of other countries. The representatives of the shareholder 
companies were ushered in to see the Shah, and he put the arm on 
them, and in subsequent negotiations in which the Shah and the 
others had the "five aces," the price collapsed. It came out of 
there initially at $2.00 and something, and within weeks it went 
to over $3.00. The leapfrogging had begun, and indeed the demand 
was rising. 

Although Aramco had already started expanding production, 
nobody was ready for this. 

Hicke : In the company? 

Jungers: In Aramco and nowhere else in the world either. As the prices 

rose, and as the consumers became worried that they were going to 
rise more, they built up inventories, and that increased the 
demand and increased the price, and we were in a spiral that we 
couldn't stop. And then of course everyone's thought in 
retrospect was, "Would it have been better if we had allowed 
these things to rise gradually and had started sooner?" We could 
argue that case back and forth forever. 

The oil companies were accused of having given in to the 
terrible Arabs. This all fit the reason why we had this great 
friend in Israel, when in fact the truth was the oil companies 
had been so good at holding the prices down that when they 
finally broke loose, they broke with a bang. You could make the 
argument that maybe we should have raised the price gradually, 
sooner, and it wouldn't have caused this panic. But who knows? 

The ultimate price and the ultimate production requirements 
in the ensuing few months became a worldwide problem because of 
the price and because of the shortages that were created. It 
wasn't a boycott, but there were more shortages again. People 
were concerned about gasoline lines. In fact, I guess there was 
another little gasoline line flurry in the United States. What 
became a problem was the amount of money required to just move 
this oil and to pay for it and to recirculate the money and get 
the money back in place . 



152 



Just, for example- -and of course this was occurring 
worldwide- -in Aramco alone our production went over 10 million 
barrels a day at that time and for certain periods. It was to 
the outer limit of our capability. The prices had gotten as high 
as the $30 range, just for easy arithmetic- -I'm not saying it was 
$30, it might have been $27 or it might have been 9 million. But 
10 million barrels a day times $30 is $300 million a day that had 
to flow into Aramco in payment for oil that was lifted offshore 
by the shareholder off -takers. We were on a forty- five day 
payment schedule, so ten days is $3 billion, thirty days is $9 
billion, and forty-five days is $13.5 billion that had to change 
hands all at one time. The shareholders had to pay it; which 
caused them large liquidity problems. We had to collect it, we 
had to give part of it to the government and immediately declare 
a dividend, and all of this had to happen simultaneously, because 
nobody had this kind of cash that they could just move around and 
wait for some of it to be returned. So these transactions 
happened quickly with everybody's banks alerted, the buyers' 
banks, the Saudis' banks, all were alerted, and this money had to 
change hands immediately and simultaneously to minimize cash 
movements to banks, some of which serviced more than one party. 

Hicke: I bet you wished you were back in the old days when the trucks 
drove up with a stack of riyals! 

Jungers: So the logistics of moving the money in itself was a tremendous 
problem. To oversimplify again, banks became very worried about 
what to do with this cash. When the Saudis and the other 
producers acquired this cash, they could spend it for projects 
inside the country. But these projects took time to build up the 
momentum to spend that money, and it was accumulating in the 
banks, and the banks really didn't know how to invest it. They 
weren't sure how liquid they had to be when the countries 
demanded their money for their projects, because there wasn't a 
plan- -they didn't really know. Therefore they couldn't invest it 
easily, even if they had a plan. 

I recall an evening that I had with David Rockefeller. He 
and his group came over, and they just wanted to discuss the 
world as we saw it. Where are we headed with this terrible 
thing? I think I can make a case for saying that this was the 
beginning of the downfall in the world's banking. These people 
had money to lend- -too much money. They began to look for places 
to lend it and therefore lent it more and more to developing 
countries like Brazil, who built dams they didn't need and 
squandered the money, and the banks couldn't get the cash back. 
Today they are fighting the problem of international assets that 
have to be written off because these loans cannot be collected, 
and certainly not on time. It created a banking problem that was 



153 



Hicke: 
Jungers : 



Hicke: 
Jungers : 



really unprecedented and could well be the cause of many of the 
financial ills of today. 

At the same time, we tried to slow this price thing by 
explaining to the Saudis- -and I did it every chance I could and 
so did any shareholder that ever met with producing governments- - 
"You are getting more dollars but this has got to become an 
inflated dollar, and you really aren't going to have any more 
value than you previously had; you've just raised the price of 
everything proportionately with oil." In fact, of course, that's 
what did happen. Furthermore, ultimately the oil producers began 
to lose energy market share, because oil was too high and people 
were beginning to conserve energy and began to use different 
energy sources that wouldn't have ever developed had it not been 
for the pricing. 

The Saudis especially have learned their lesson, and that's 
why today they are increasing production capability way beyond 
what's currently needed. They intend to keep the price within 
reasonable bounds and hold the rest of OPEC in line by this 
method. They have a couple of hundred years of production 
capability at high levels, maybe more, and if you realize that 
you have that- -and it's sustainable for plus or minus 200 years, 
pick your number, it doesn't matter- -if you have that sort of an 
asset that you want to sell, you surely don't want somebody to 
become a competitor such as alternative energy sources and 
conservation. You want to price oil just high enough to where 
you get as much as you can for it and just low enough to where 
none of these alternative sources makes any sense. That's where 
we are today. 

I think they've done that. 

They've done that. And as for any of this talk about "cheating 
in OPEC" by the press, which doesn't understand the politics of 
the countries in OPEC; any of this talk about OPEC not being in 
control; I think they are not a cartel for all of the reasons I 
explained. Really they've done a tremendous job of staying 
together and keeping that price where the alternative energy 
sources just don't exist today. 

Certainly does seem that way, doesn't it? 

That's right. Nobody's building smaller cars anymore. They are 
not building bigger ones either, but it's kind of holding. 
Nobody is building nuclear power plants, and the 
environmentalists can run wild because a nuclear power plant 
costs more anyway, and so nobody can make a case for 
conservation. 



154 



fi 

Jungers: Nobody is worried, really, about conserving except as 

philosophically the right thing to do. We all gave it lip 
service, and sure people have increased insulation in their 
houses, but that's about it. They're not concerned about whether 
to buy a big car that burns a little more gas or not. And that's 
about where we are . 

Hicke: Yes, but it was pretty clear a couple of years ago that we were 
not going to let too much oil get away from us. 

Jungers: We are not even concerned enough to pass laws that are favorable 
to increasing exploration in this country, because today, at 
these prices, exploration and increasing production in this 
country is just economically not viable. 

Hicke: And this is all well calculated by OPEC? 

Jungers: Of course. Sure it is. And since that's the case, that means 
it's got to be in our national interest to keep the Saudis our 
friends and to keep this production capability for the Western 
world. That goes for other countries too, of course. 

Hicke: Because Saudi Arabia has the most influence? 

Jungers: They have the most oil. That's about all I think I need to say 
about that at the moment . 



Gas Production for Internal and External Markets 



Hicke: Well, that leaves us with electric power and gas in Saudi Arabia. 
Tell me about those developments. 

Jungers: Okay, gas. Prior to the price explosion, it didn't make economic 
sense for Aramco or any other Middle East producer to conserve 
gas. It was too expensive. You've got to realize that the only 
reason that there was a gas market in this country is because 
there was a market that demanded gas. There was no gas market in 
the Middle East, and you surely couldn't afford to transport it. 
In the Middle East, the production was self-sustaining by the 
pressure of the reservoirs, and when you produced these 
reservoirs, the associated gas was produced with the crude oil. 
Sort of like putting your thumb on the top of a coke bottle and 
shaking it and then the coke comes out with gas. So this gas was 
produced, had no use, and we burned it. The producing areas of 



155 



the Middle East were lit up like daylight burning the excess gas. 

As pricing increased and as everybody, including the oil 
companies, began to question the environmental aspects of burning 
all of this gas, Aramco embarked on a gas program that Yamani and 
I talked of many times. The shareholder companies were not 
interested, really, as shareholders, in gas. They had no place 
to put the gas, and this was an extra expense. So we gradually 
built up a propane and butane market, we being the shareholders 
and the Saudis, which primarily existed in Japan. Japan began 
burning propane and butane, which were the heaviest gasses out of 
the associated gas stream. This, at the top of our production, 
consisted of 600,000 barrels a day of liquefied petroleum propane 
and butane. Because it was heavier gas, it was less expensive to 
liquefy, and ships were designed that transported this gas, not 
under pressure, but rather let it expand, compress it, and blow 
it back into a liquid to cool it. You just kept pumping it as 
you were hauling it to Japan. 

This became a big market. Aramco initiated this, and this 
left only the methane, which is the C 2 , the lightest end of the 
gas, to be used in the Kingdom, because methane- -LNG [Liquified 
Natural Gas] --is too expensive to transport and use economically. 
It's too expensive and very few terminals exist to take it 
anyway. So the rest of the gas gathering system was designed to 
move the methane to areas in the Kingdom that could use it, 
namely power plants, and to Aramco with its own need for power. 
That was the beginning of and the end result of Aramco 's gas- 
gathering system. Today, in Aramco, the flares are minimal, just 
as a safety in production. There are no flares, and it's true in 
most of the producing areas today: the propane and butane market 
has become more developed and it's a pretty good source of 
revenue to the countries. 



Electrical Power Distribution: Saudi Consolidated Electrical 
Company 



Jungers: It again was in that period when we were moving ahead with the 
gas program that it occurred to me primarily that we had to do 
something with our power system. Aramco had its own power 
company, its own power. All of our communities were run by our 
own power plants, and they were as reliable as any power plants 
are anywhere. Sometimes we went to the local towns at night for 
dinner with our Saudi friends, and all of a sudden the power 
would go off, and it would be hot because the AC would be off. 
And still Aramco' s community nearby was lit up and functioning. 



156 



These people are there damning their own power system, which was 
only going to end up with discontent and wondering why only the 
"Aramco foreigners" had power. 

I just knew we had to do something about this. The power 
that the local power companies had was outdated, old, diesel 
generator sets that they tried to hook together. They weren't 
integrated, all localized power, and it was going off all the 
time, and the transmission facilities were terrible. So we 
thought of the idea of forming a consolidated power system 
which- - 

Hicke: A private company? 

Jungers: A private company, could be owned by the government, it could be 
owned by Aramco. If we could buy these individual power 
companies and pull them together and tie that into the Aramco 
system, it would make a lot of sense. The combined Aramco and 
newly modernized additions to the system could become a large 
power generation company. We didn't want to be in the power 
business; we didn't want the retail end of it. 

So, as it developed, I finally went to see the minister of 
the interior, who was Prince Fahd, now the king, and suggested to 
him that he get a decree, a royal decree if he could, that gave 
us the authority to buy out these power companies. We would form 
a Saudi Consolidated Electric Company, we would put our power 
into this company, we would operate the company for a fee, we 
would sell our power plants into that company. This power 
company would be the vehicle that sold power to everybody, 
including Aramco. The shareholders were not very enamored with 
this idea; they felt it was over-complicating our lives. But 
Amir Fahd thought it was a super idea, but the only thing wrong 
with it was, "Let's do it in Riyadh, first," because his AC was 
going off too. [laughter] 

I told him, "No, we are not going to do it in Riyadh first, 
because our power is over in the Eastern side, and that's where 
we - - . " 

He said, "Well, you can tie it in." 

I said, "That's sort of the next step. Let's get this--" 

"No, I want it in Riyadh!" [laughter] I convinced him that 
that could hardly be the first step, but he, whenever we talked 
about this, he then jokingly would pull my leg and say, "When are 
you going to tie us in?" and "Why don't you do it?" 



157 



I said, "Because I don't want powerful people like you 
calling me up and giving me hell about your AC! That's why. I'm 
too smart for that , " and we ' d laugh . 

He said, "We wouldn't do that!" 

So SCECO [Saudi Consolidated Electric Company] was formed by 
decree. We had a board of directors that was partially the 
government, and we ran it. SCECO is still run by Aramco, but 
it's owned by the government. Of course, now so is Aramco, but 
it's a separate company. We immediately got government 
agreement, and the government was quick to appropriate money. We 
built distribution systems and got rid of the junk and put in 
modern power plant additions as quickly as we could. The lights 
were on, the AC was running, and everyone said, "By God, that 
Aramco did a good job!" And the government got credit, too, for 
having forced Aramco to do it and thus solved a serious problem 
for its people. 

Hicke: A century's worth of good will. 

Jungers: And we were known for that. And I was personally known for 

having done it. SCECO is a going concern, and they are operating 
in with Riyadh now. 

Hicke: You haven't had any calls? 
Jungers: No calls. 

So it was all part of a development that really had to occur 
in Saudi Arabia, and the government was willing, but wasn't 
ready, wasn't really able to take that big step and, as usual, 
Aramco could do it, and we did it. And they paid for it. It was 
about that simple. 

Hicke: It sounds like you used humor an awful lot in dealing with 
people . 

Jungers: Well, we tried to. 

Hicke: And they went along with that? 

Jungers: Well, it was pragmatic humor. 

Hicke: Yes, but they seem to have a sense of humor, of being able to 
laugh at themselves. 

Jungers: Yes. So that was SCECO. 



158 



ANCOM: Agreements and Negotiations Committee 



Hicke: Somehow or another we haven't talked about ANCOM, and I don't 
even know what it is . 

Jungers: Back in the very beginning of time of Aramco, the corporation had 
a board of directors consisting of the shareholder directors and 
the Aramco insiders. Early on, Barger was a proponent and sold 
the idea of putting some Saudis on the board. We didn't have any 
truly qualified Saudis in the company, but they did put on a 
couple of Saudi directors way back, one of whom wasn't really 
connected with the government that much, although the government 
agreed which Saudis to put on the board. It was an initial step 
in kind of making everybody feel it was the Arabian-American oil 
company. 

Later, the petroleum minister became a board member, and 
thus Abdullah Tasilci and later Yamani, was a board member. Amir 
Saud al- Faisal, who is now the secretary of foreign affairs, 
became a board member, and we then added a third member, Dr. 
Abdul Hadi Tahir, who ran Petromin. Those were the last three 
board members while it was still an American- owned company. 

But this posed a lot of problems, because the Saudi board 
members obviously couldn't be party to agreements between the 
shareholders. They couldn't be party to discussions of 
negotiations with the Saudi government and have authority for 
Aramco to negotiate with the Saudi government, which meant 
negotiating with Yamani, who was on the board. So rather than 
having class one and class two directors, we had committees of 
the board. One was the executive committee, of which one of the 
Saudis was a member. That was to act as executive committees 
usually act, which is to act at the pleasure of the board; but it 
can act quicker on executive items that need to happen when you 
can't get the whole board together, if they are within guidelines 
that the board has already set up. 

The executive committee then had the acronym EXCOM. We also 
had an ANCOM, the committee on negotiations with the Saudi 
government, the Agreements and Negotiations Committee, in other 
words . 

ANCOM consisted of the whole board except the Saudis and 
except certain insider directors in Aramco that were just not 
involved in this process. We cut some of them out deliberately 
to make it consistent with cutting the Saudis out and make it 
look right, although the Saudis knew exactly why we had to do 



159 



this and they understood this. So this was the ANCOM. 
Negotiations and correspondence with shareholders was all under 
the ANCOM umbrella and therefore was privileged as far as the 
Saudis were concerned, and privileged as far as the whole board 
of directors was concerned. It was never discussed in the board 
except to say, "We reached an agreement with the Saudi government 
that says--" 

Hicke: These were reports that you would write back after meetings? 

Jungers: After meetings and trying to discuss where do we go from here and 
"I want more authority to do the following things," and "Yamani 
said this, and I don't believe him," and all of that. So that 
correspondence was closely held until parts of it got away in 
some of these congressional investigations led by Senator [Frank] 
Church of Idaho. He and his liberal colleagues were so intent to 
defend Israeli positions and to blame the oil companies that they 
allowed some material sensitive to producing countries to 
surface. We had been careful not to say things in that 
correspondence that were insulting to anybody in the government, 
but in the correspondence there were inferences that you didn't 
really think that this is what Yamani meant and so on. Some of 
that stuff did surface, unfortunately, and Yamani and I had some 
words over it. I suppose, in retrospect, I could have written 
some of it even more carefully, but-- 

Hicke: It's hard to draw the line and-- 

Jungers: --and still try to convey the message. Similarly, I got 

correspondence under the ANCOM umbrella that certainly was a 
message they wanted to convey and it certainly wasn't for the 
ears of Yamani, either. So this stuff had to be privileged, but 
under the Freedom of Information Act, it got loose, some of it. 

Hicke: Well, what you received couldn't have gotten loose, but maybe 
they kept copies in the files somewhere? 

Jungers: Sure they did. It was all over. They were careful, but they 
were big corporations and they had a lot of staff, all of whom 
had files. 

Hicke: Well, they subpoenaed- -I know that they subpoenaed all of 
Chevron ' s records . 

Jungers: Sure they did. Of course they did. 
Anyway, this was ANCOM. 



160 



VII LIFE AFTER ARAMCO 



Board of Directors. Georgia-Pacific //# 



Hicke: Okay, let's just talk a little bit about some of the things you 
are doing now. 



Jungers: I left Aramco in January of 1978 after thirty years, at age 

fifty-one. I decided to stay active, and initially I accepted 
board offers to be on boards of directors primarily based upon 
them being windows to look out of. In this regard, Georgia- 
Pacific [Forest Products Company] was one company that was then 
headquartered in Oregon and asked me to join their board. It's a 
large company; it is now the biggest forest products and paper 
company in the world, and I've been on that board since '78. It 
did indeed turn out to be a good window. I learned a lot about 
the timber industry. 

[phone rings; tape interruption] 

Jungers: It's an ongoing board seat that I value very highly. They are, 
of course, deeply involved in the environmental issues of today, 
which makes it an interesting company, also. 

Hicke: And you were telling me they own property all over? 

Jungers: Yes. It's a large company. It owns property all over the United 
States, timber lands. 

Hicke: They are headquartered in-- 

Jungers: They are now headquartered in Atlanta. They moved out of 



161 



Portland and went to Atlanta. 



Board of Donaldson. Lufkin. Jenrette: Thermo-Electron 



Jungers: At the same time, within a reasonable period then, I also joined 
the board of Donaldson, Lufkin, Jenrette, which was a smallish 
investment banking firm but a prestigious one. This also was a 
good window. And Arab friend of mine, Suliman Olean, was a 
significant shareholder, and this is what brought it to my 
attention. I remained on the board until we sold the company to 
the Equitable Life Insurance Company, but at that point I was 
asked to remain on the board, I and three other of the outsiders. 
We are now titled "advisory directors," but we function in every 
way as a director. In the case of Donaldson, Lufkin, Jenrette, I 
also became a significant (at least for me significant) 
shareholder, and in addition to being a window, that also began 
to set a pattern of belonging on a board mostly when you have a 
significant investment. 

At about that time, I also joined the board of a company 
called Thermo-Electron. It is a very fast-growing, technology 
company in Boston, listed on the New York Stock Exchange, founded 
by an MIT professor at a time when he began to realize that 
energy was a problem. The professor, Dr. George Hotzapolous, was 
a professor of mechanical engineering, and his specialty was 
thermionics. This company has grown very rapidly. It has been a 
most rewarding board membership from the standpoint of learning 
about the technology, learning about how to best manage a 
technology -or rented company, and of course I have a very 
significant investment. 

In Thermo-Electron we have devised a unique system of 
spinning out ideas into subsidiary companies that go public, and 
we retain say 80 percent control of them. These companies 
operate separately with some Thermo people on the board, some 
Thermo outside directors on the board, and some truly outside 
directors on the board. This has worked very well, because it 
gives the management of a new idea an incentive to finish with 
the R&D phase more quickly and get it out on the market where 
they can get some stock of their own and realize the profit on 
their idea. We have spun out eight companies this way, and it's 
working very well indeed. The products that came out of the 
company all started as energy- oriented research that usually has 
a unique fallout of some kind. It is most interesting. 

Since that time, I have joined only boards where I have a 
significant investment in the company. For example, AES 



162 



Corporation was founded by Roger Sant, who was on the Thermo 
board with me. He set out on his own to form this co- generation 
company, asked me to be a director and an initial investor. This 
has been a true success story. It is a fine company, operated 
for all of the right reasons and with a very modern management 
outlook. I could go on and on with some of these boards, but 
they all have the same sort of a twist to them and most of them 
have an environmental and/or energy type of thread running 
through them. 

[phone rings; tape interruption] 
Other Interests 

Hicke: Let me just ask: I know you are doing some work with the 
University of Washington and Oregon State. 

Jungers: Yes. Like I said, there are a number of other companies that I 
am currently associated with for one reason or another. Most of 
them are investment -oriented reasons. In the case of Dual 
Drilling, it was an investment -oriented reason; it was a company 
that I bought for the Bechtel group at a time when they wanted to 
get into the oil-related business, and I stayed with the company 
as an investor and as a board member until the Bechtels and the 
investors sold their interest to a Norwegian shipping company, 
Musvald, and I agreed to stay with the company and in fact have 
agreed to become an advisory director of the Musvald board. 

I did it for two reasons: one because I liked the Dual 
management and was interested in making sure that they got on 
well with the Musvalds. Secondly, I was interested in a 
Norwegian company and finding out how Norwegian companies 
function. So I stayed with it. I'm still there. Dual has since 
gone public on NASDAQ and I joined its board again. 

Hicke: You could write a book on management. 
Jungers : Yes . 

And the other area that I've gotten into is universities. I 
became a trustee of the American University in Cairo before I 
left Aramco, and the American University in Cairo was of great 
interest to me because it was doing a superb job of providing an 
American-oriented education in Egypt, and it was highly regarded 
in Egypt. All of President Nasser's children went there, 
President [Anwar] Saddat's children went there, President 
Saddat's wife went there. It's a small school, a liberal arts 
school. During my time we had given it a good start in the 
engineering field, too, but it became even more important when 



163 



the American University in Beirut ran into trouble with all of 
the civil strife in Lebanon. AUB was a bigger university and 
more broad, but it had a similar type standing in the Middle 
East. In fact, many of the government figures in the Middle East 
are graduates. But now that AUB is sort of gone, AUC in my 
opinion becomes even more important even though it's smaller, and 
so I stayed with it as a matter of interest and contribution. 

I also joined the board of the University of Washington 
Foundation and have done a lot of development work. I funded a 
professorship because I am an alumnus of the university. In 
conjunction with the university, the dean of engineering had 
asked me to become part of the ECSEL group as an advisory 
director. ECSEL stands for Engineering Coalition of Schools for 
Excellence in Education and Leadership; it is to promote 
excellence in engineering curriculum. 

It was put together under the aegis of the National Science 
Foundation, and there are a number of universities that are part 
of it, all engineering-oriented: University of Washington, MIT, 
Howard University, Morgan State, et cetera. We usually hold 
meetings at the Howard University campus in Washington, DC. 
Howard is, as you know, a black university, and a very good one. 
It has been interesting to be part of it. 

This group, ECSEL, is doing some remarkable and badly needed 
work in changing engineering curriculum and in changing what 
needs to be done to cause students to want to get a technical 
education. The previous practice has been one of eliminating all 
but the very best students early. Young people became 
discouraged early by heavy doses of physics and mathematics, 
especially since it wasn't yet apparent why such subjects were 
needed. The new approach is one of not trying to flunk them out, 
rather try to get their interest and hold their interest and 
begin to teach, using techniques of designing and building a 
product like a small rudimentary rocket engine. Early on, 
students will realize they need only to run smack up against some 
mathematics and some physics that you don't understand. So you 
give them a light touch of each one that helps this course. And 
the next thing you know, you have created some interest. Then 
they are led into stuff as they go on. You are pulling people 
along instead of trying to flunk them out and the result is more 
people interested in technical careers. 

This is catching a lot of momentum. It is monitored by the 
National Science Foundation and is an extremely interesting 
process. These seven universities are the forerunners in this, 
and already others are trying to become a part of it. It is hard 
to turn a university curriculum and methods around. 



164 



Hicke : 



Jungers : 



Hicke: 
Jungers ; 
Hicke: 



Sure. Everybody who teaches has a vested interest in teaching 
what they have always been teaching. 

Exactly. I am also involved with the Oregon Health Sciences 
University, which is a small but old and prestigious medical 
school, nursing school, and school of dentistry that used to be 
part of the University of Oregon, but now the Health Sciences 
University is separate from any of the other universities. It 
also runs the veterans administration hospital, it runs the 
children's hospital, and does a lot of research work. I believe 
it's the largest employer in Oregon because of the research and 
hospitals. I find it an interesting thing to work with, because 
they've got some real money problems that we can help with good 
development programs. And they've had, of course with a large 
organization like this, real management problems that business 
people can assist. So I find these things interesting. 

I think that about winds this up. 

I'm sure you have been doing a lot of traveling but we'd be here 
another week or so hearing about all of that. 



Yes. I bet you would, 
contributes. Okay? 

Thank you very much. 



I don't know what that really 



Transcriber: Kian Sandjideh 
Final Typist: Samantha S. Schell 



Regional Oral History Office University of California 

The Bancroft Library Berkeley, California 



American Perspectives of Aramco, the Saudi-Arabian Oil-Producing 

Company, 1930s to 1980s 



Paul and Elizabeth Arnot 
ENGINEERING AND FAMILY LIFE IN ARABIA 



Interviews Conducted by 

Carole Hicke 

in 1993 



Copyright 1995 by The Regents of the University of California 




Elizabeth H. Arnot and Paul H. Arnot, 1993. 



TABLE OF CONTENTS--Paul and Elizabeth Arnot 

Interview History 
Biographical Information 

I BACKGROUND 165 



II ARAMCO 167 

Joining the Company 167 

The Move to Saudi Arabia 167 

Dhahran in 1938 171 

Elizabeth's Background 172 

Paul's Early Work 175 

Weathering the Crises 177 

Wedding in Bahrain 178 

III LIFE IN ABQAIQ 181 

Moving to Abqaiq 181 

Holidays: American and Arab 185 

Relations With the Arabs 188 

Recreation in Abqaiq 193 

Personnel 195 

IV BACK TO DHAHRAN, 1954 197 

Housing 197 

Producing Oil 198 

Responsibilities With Aramco Overseas 198 

More on Work in Dhahran 199 

Life of a Wife in Dhahran 200 

Labor Relations 201 

Family Life and Problems 202 

The Local Amir 205 

Noon Day Feeding 207 

Raising Chickens and Vegetables and Stories About Food 208 



INTERVIEW HISTORY--Paul and Elizabeth Arnot 



Paul and Elizabeth Arnot lived and worked in Saudi Arabia in the 
early days of Aramco. Their recollections form the earliest tape- 
recorded memories in this series. 

Paul joined Aramco (then called the California-Arabian Standard Oil 
Company, or Casoc) in 1938 and was sent to Saudi Arabia in August of that 
year. He went to work as a field engineer on drilling and production. 
In 1944, Elizabeth signed up with Aramco as a nurse and went to Arabia, 
where she and Paul met and married. It was life on a frontier, in the 
desert. They had half a block of sidewalk in front of their house where 
she wheeled the baby stroller up and down. Over the years, they saw the 
company evolve into a gigantic oil producer, and life in Arabia underwent 
a similar change. Paul went on to become general manager of operations, 
vice president for operations in 1958, and senior vice president and 
director in 1961. 

Paul and Elizabeth were interviewed in their retirement home in 
Cupertino, California, on April 1, 1993. Sadly, Paul died before 
reviewing the transcript, but it was reviewed by Elizabeth and a few 
changes made. An interview with Bill Mulligan was conducted earlier, and 
an article by Paul is attached to the transcript. 

Carole Hicke 
Senior Editor 

September 1994 

Regional Oral History Office 

The Bancroft Library 

University of California, Berkeley 



Regional Oral History Office 
Room 486 The Bancroft Library 



University of California 
Berkeley, California 94720 



Your full name 



of birth L I C \<L I jv G .. 



BIOGRAPHICAL INFORMATION 
(Please write clearly. Use black ink.) 
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Father's full name \\ A i~ 
Occupation 



Birthplace 



Mother's full nameA 

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Birthplace Jjl 5 & O U 



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Your children 



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Where did you grow up? J^l C-\<.l 



Present community 

Education ft, $. 






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Occupation(s) 



Areas of expertise_ 



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Other interests or activities 



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Organizations in which you are active_ 



Regional Oral History Office University of California 

Room 486 The Bancroft Library Berkeley, California 94720 

BIOGRAPHICAL INFORMATION 
(Please write clearly. Use black ink.) 
Your full name 



Date of birth MftV <? . /4 / 3 Birthplace RlfL& . Co <-6 R flV 

~~t ~t~? T 

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Occupation -fTQU fr^ W 1 t^ E Birthplace j)u K H/fr A) t EsHQLftSJ 

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Occupation jg-r^^r^Af K.rt&lrt&P\ Birthplace j JC K f |V 6 f ^f/ 
Your children /VgHAi-A A/V/^^ A ^ 3 ^ K ' ^ W / C ^ 



Where did you grow up? 



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Present community - \^U P&R T iH O t {_ fr L- (i^ Q /g/V i 



Education /T3 . S. Uri t V . L'frl-lF*. 



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Other interests or activities 

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165 



I BACKGROUND 

[Date of Interview: April 1, 1993 j^/ 1 



Hicke: I'd just like to start by saying this is April 1, and I'm 

talking to Elizabeth and Paul Arnot. I have just seen a book 
that Aramco gave Paul when he retired in 1968, and I like 
particularly this one phrase which says, "Paul Arnot is an 
outstanding oil man. Aramco has become a great oil company. 
There's a clear connection between those two facts." I think 
that's quite a tribute. 

Let's just start with you, Paul. I'd like to ask you when 
and where you were born. 

P. Arnot: I was born in Licking, Missouri, March 9, 1908. 
Hicke: And you grew up-- 

P. Arnot: In Licking, Missouri. I went to high school there, finished 

high school there. At the end of high school, my mother moved 
to the state of California, in Taft-Bakersfield area of 
California. 

Hicke: And let's ask you the same question, when and where were you 
born? 

E. Arnot: I was born on May 9, 1913, in Rifle, Colorado. 
Hicke: And you grew up in Colorado? 

E. Arnot: No. My father brought our family to southern California when I 
was about five, and I grew up in southern California until I 
came up to the University of California at Berkeley. 



symbol (##) indicates the beginning or end of a tape side, 
a guide to the tapes, see page following transcript. 



For 



166 



Hicke: Is that where you two met? 
E. Arnot: No, we met In Arabia. 

Hicke: Oh, I see. Okay. Well, let's find out here how this happened. 
You went to the University of California at Berkeley. 

P. Arnot: Yes. I have a degree in mining engineering. 

Hicke: And you graduated in 1932. 

P. Arnot: That's right. 

Hicke: And then you went to work for Standard- - 

P. Arnot: I went to work for the Standard Oil Company of California. They 
sent me to Lost Hills as a well puller- -rather , actually, I was 
a pumper. I would say for I guess about a year and a half or 
so, I was a pumper and a well puller, more or less field work. 

Then I was transferred back to Taft, worked as a 
maintenance man for about a year and a half. They sent me to 
San Francisco in the department of cost control; they put me in 
a training program. I worked for about six months in the San 
Francisco office. Then I was sent to La Habra, California, as a 
development engineer, worked there six months. Then they sent 
me to Kettleman Hills as a production engineer, all part of the 
training program. 

The training program was all right, but the fact that I was 
from the organizational cost control department always put a 
kind of a question mark on my acceptance, the fact that they 
were apprehensive that perhaps I was there to reorganize the 
outfit, or possibly being on a training program as a threat to 
the supervisor. 

Hicke: Little damper on your welcome? 

P. Arnot: That was right. So I never was fully, wholeheartedly accepted 
into it. 



167 



II ARAMCO 



Joining the Company 



P. Arnot: Then, at the end of my six months at Kettleman Hills, I expected 
a transfer, but I got a call from San Francisco, and they asked 
if I wanted to go to Arabia to work for Casoc [California- 
Arabian Standard Oil Company, predecessor to Aramco] . They were 
good salespeople, so I accepted. I ended up in Arabia on August 
15, 1938. 

Hicke: Do you recall who called you? 

P. Arnot: Gaylord, the chief petroleum engineer. Actually, I was 

interviewed for the job to be sent to Arabia by Floyd Ohliger, 
who happened to be in San Francisco at that time. 

Hicke: That's certainly a familiar name. He really goes back, doesn't 
he? 

P. Arnot: Oh, yes. Well, Floyd was in Arabia way long before my day. 

Hicke: But the well didn't start pumping in Saudi Arabia until the 
thirties, wasn't it? 



The Move to Saudi Arabia 



P. Arnot: Well, I'll tell you the story on that. 

The first well, well #7, the discovery well, was completed 
in March of 1938. That was three or four months before my 
arrival. Interesting, on my arrival in Bahrain- -Bahrain is an 
island just off the coast of Saudi Arabia, and it was the point 
of entry to Saudi Arabia at that time. It had an airport and 
also a seaport. Our ship went to Europe, and from Europe, 



168 



Hicke: 
P. Arnot: 



Southhampton, I took a BOAC flying boat, and then went to 
Bahrain. Bahrain was the seaport for that area. Actually, you 
spent the night in Basra, and the next morning we went to 
Bahrain. 

Well, on the plane I met the GSI, which was the geophysical 
individual, who had told me that the man representing Casoc, 
they called it the Casoc House, or a point for us to contact, 
was a fellow- -frankly, he used pretty rough language, he said he 
was a first-class S.O.B. 

When I arrived, it was hot. It was in August. Oh, it was 
terrifically hot. I probably had a coat and something else on 
at that time. Well, when I got there at the office, Bill 
Faulkner, who was the man in charge, was on the telephone to 
someone, and the guy said- -I'd heard cussing before and cussing 
later. He was an absolutely first-class- -when he was there 
cussing over the telephone, all I could think of was Mark Twain 
telling his wife that she knew the words but not the tune when 
she cussed. Well, he not only knew the words, but he knew five 
different tunes. [laughter] 

Finally he said to the person on the telephone, "I hope you 
rot in jail." Then he slammed the receiver down and turned to 
me and said, "Who in the hell are you?" Well, with that, I was 
about ready to fall through the floor. I told him who I was, 
and he said, "The launch for Arabia leaves at 1:30 today, and 
you goddamn better be on it." 

So I said no, I had been invited by Charlie Davis, who was 
the production manager at Bapco [Bahrain Petroleum Company] , to 
go spend the night with him. Well, he then queried me how I 
happened to know Charlie Davis; that kind of put a little damper 
on his enthusiasm for cussing me out. 

I said also that I was told that I should go have some 
clothes made, before going in, and buy a topi. So he asked for 
one of these men to go with me, and I had measurements taken for 
the clothes. I thought maybe I had to come back in a couple 
weeks to get the clothes, but they said they'd be ready the next 
morning. 

So the next morning--! spent the night with Charlie Davis -- 
Can I just interrupt you and ask who was Charlie Davis? 

Charlie Davis was the production manager- -he was the friend I 
knew in Kettleman Hills. He was a Standard Oil of California 
man who had been transferred ahead of me into Bapco- -Bapco is 



169 



Hicke: 
P. Arnot: 
Hicke: 

P. Arnot: 



Hicke: 
P. Arnot: 
Hicke: 

P. Arnot: 



Hicke: 
P. Arnot: 
Hicke: 



also part of Standard Oil Company of California. Actually, they 
were at that time a full owner of the Bapco. That's Bahrain- - 

Bahrain Petroleum Company. 
Yes. 

Okay, so I interrupted you when you were about to go back for 
your clothes. 

Next day I went and picked up my clothes, and they fit 
perfectly. So getting on the launch, there were three people 
besides me. Two men were a little worse for wear, but the third 
man was Dick Kerr. Well, then Dick Kerr told me, went on to 
great length as how he had cussed Faulkner out, really told him 
off. And it developed that he was the guy that was on the 
telephone . 

What had happened, the first barge of oil from Saudi Arabia 
had made a shipment the day before, or that morning, the 13th or 
the 14th, and he had caught a ride on it to go over, to ride the 
first shipment over, without any passport, any re-entry or exit 
visa, or anything. So that was what all the argument was about. 

And he was on that first barge? 
Yes, on the first barge. 

That's really interesting. And here you must have gotten both 
viewpoints, both sides of the argument. 

Yes. This conversation didn't last more than ten minutes, and I 
could see that the person on the other end of the line was 
feeding him something, knowing that he couldn't equal Faulkner 
in language. [laughter] I was raised as a kid in Missouri with 
mule skinners and so forth, and they were pretty good at 
cussing, and later, I had a lot of contact in California with 
drillers, and also in Arabia with drillers. They were all good 
ones, too. But Bill was tops. 

He was the king. 
Yes. 

Well, what were first- -well, please do tell me stories whenever 
you can, because I know Frank Jungers is interested in 
anecdotes . 



170 



P. Arnot: Well, he mentioned that. I told him also that when you tell 
some of these stories, he also- -he involves other people too, 
who could be hurt by it, I don't know. 

Hicke: Well, of course, we'll get your permission before we print 

anything, I'm sure that you'll want to do that. I'm going to 
ask you to sign a release just to make the information 
available, but it won't be made available until you approve it. 

P. Arnot: Yes. Well, then, of course, that was my first trip from 

Bahrain; I landed at the al -Khobar pier. Dick disappeared; I 
don't know how he got off. I'm sure that he would have said, 
"Well, I've just run over on the launch and just came back," and 
he would tell some story like that. But anyway, he disappeared, 
so I didn't see him. 

It was interesting when I landed in al-Khobar. Al-Khobar 
now is a city of probably 50,000 to maybe 100,000 people. At 
that time, it was six barasti- -now, barasti is a palm frond hut, 
village. [discussion of spelling] The custom house was 
apparently where the people in the custom house lived, and 
across the way, which now is the al-Khobar city, it was one 
barasti . 

So we went on up to Dhahran camp, which was about, I'd say, 
eleven kilometers away, a short distance. It wasn't very 
impressive either. 

Hicke: Had they opened that big pipeline yet? I've seen all of those 
movies that they took of King Saud opening the pipeline. 

P. Arnot: No. The pipeline- - 

Hicke: Or was that Tapline? 

P. Arnot: That was probably Tapline. 

Hicke: But there was some kind of a pipeline- - 

P. Arnot: Oh, I think you probably saw when they made the first shipment 
of oil off of Ras Tanura, and he was opening the valve there to 
turn on the oil. All the oil had been transferred over, and I 
think the tanker had already been filled, and the whole thing. 
But these were all faked deals for the benefit of the king. 



171 



Dhahran in 1938 



Hicke: Oh, I see. [laughs] So where did you go after you arrived at 
al- Khobar --you said to Dhahran? 

P. Arnot: Well, we went on up to the camp, and I was there from 1938 until 
'46. 

Hicke: Is that where you met him? 

P. Arnot: Well, okay, you tell her. 

Hicke: Yes, I want to bring her in wherever- - 

P. Arnot: Okay, that would be a good place then. 

E. Arnot: You probably ought to tell her about the Palmer huts first. 
What the camp was like when you arrived. 

P. Arnot: Oh, the camp when I arrived- - 
Hicke: This is Dhahran? 

P. Arnot: In Dhahran, the camp consisted of Palmer huts. Now, a Palmer 
hut was a metal building with one room, fully air-conditioned, 
fully insulated and everything. 

Hicke: Prefabricated? 

P. Arnot: Oh, yes, prefabricated. As a matter of fact, it was shipped in 
as a whole . 

Hicke: Something like quonset huts? 

P. Arnot: Well, no, it was square. Actually, we never had quonset huts 
over there. There was a furush building. Furush buildings: 
they would mine from the seabed big slabs of limestone rock, 
which they used for construction of buildings. 

Hicke: Is that right? So it was seabed rock? 

P. Arnot: Oh, yes. It was about four to six inches thick, and they were 
able to pry it up in big hunks. 



Hicke: 



How was that insulating? 



172 



P. Arnot: Well, you had to insulate in addition to that. No, it wasn't 
for insulation; it was a poor insulation. During some of the 
damp days, it used to smell like the sea, too. 

Hicke: Were those for living, or were those office buildings? 

P. Arnot: They were offices, and also some of the buildings, actually some 
of the houses were- -I was thinking of that house we lived there, 
the last one. Was that a furush? 

E. Arnot: I don't remember. 

P. Arnot: I don't remember either. 

Hicke: Where did you live when you first- - 

P. Arnot: Well, I lived in the camp, bachelor there. 

Hicke: In a house? 

P. Arnot: No, in a dormitory, in one of these Palmer huts. The air 

conditioning was very marginal. The weather there is, in the 
winter months it's nice. In early April until, say, around the 
first of August, it was extremely hot. The month of August and 
sometimes part of September, you got the tail end effects of the 
monsoons that blew in, change the wind, they blew in off the 
Gulf. It was extremely hot and humid, extremely humid, just 
dripping wet. Then from September on, the fall season is quite 
warm until the winter months. We didn't get very much rain, 
I'll assure you. 



Elizabeth's Background 



Hicke: Okay, now is it time to get your story? 

E. Arnot: I was working for the University of California School of 

Nursing. I was a surgical nursing care supervisor. Everybody 
was leaving- -this was 1944- -everyone was leaving to go into some 
sort of military work. But I wasn't acceptable to the army, and 
I had early in 1944 a call from the forerunners of the United 
Nations, I think it was UNRA [United Nations Relief Agency] at 
that time, to go to Greece to set up the schools of nursing 
after Greece was liberated. But my employer, the dean of the 
school of nursing, wouldn't release me, because I had a contract 
until the first of July. 



173 



But later, Dr. Curtis from the Standard Oil Company came to 
her and said that they were looking for someone to be the chief 
nurse in Arabia, and also to hire nurses. She told him that she 
thought I was going to leave anyway, and that he had permission 
to interview me. So he did, and there was another nurse, 
Shirley Farrow, who had decided that she would go. 

Hicke: To Saudi Arabia? 

E. Arnot: Yes, to Saudi Arabia. So I thought, well, this was a chance for 
me to go and do something different. 

But at that time, San Francisco was a war manpower shortage 
area, and you had to have permission to change jobs. So I had 
to be interviewed by the War Manpower Commission on, I don't 
know, four or five occasions before they finally said okay, I 
could go. You could quit your job and then be unemployed for a 
month, and go someplace else and be employed. But they finally 
gave me permission. 

So on the 12th of June, Shirley and I, and I think we were 
with a party with six men, left San Francisco. 

Hicke: Which year? 

E. Arnot: In 1944. We traveled by train to Chicago, to Miami, and from 
Miami we were flown with the army- -it was the ATC at that time, 
the Army Transport Command- -and we went by way of San Juan, 
Puerto Rico, and British Guyana, and then to Belem in Brazil. 
We were there about eight days before- -you took turns, whoever 
came up. If a batch of VIPs came along, they got priority to 
go, and finally your turn came. 

Then we went on across to Ascension Island and then to the 
west coast of Africa, to Accra. 

P. Arnot: Tell her you had captain's rating, or something. 

E. Arnot: Oh, well, they gave us a military rating in case we'd be 

captured and made prisoners of war, so we were given a officer's 
rating. 

Hicke: And you were a captain? 

E. Arnot: Well, I don't think it was that; I'm thinking about it. 

P. Arnot: Well, say you were a general! [laughter] 

E. Arnot: I think it was a lieutenant. 



174 



Anyway, then we flew across Africa and got to Cairo, and 
then the army turned us loose in Cairo. At that time, they had 
an office there, but we had a difficult time getting in touch 
with the manager. 

Hicke: Standard Oil had an office there? 

E. Arnot: Yes, a representative. I've forgotten exactly now how we did 

get our arrangements made, but we finally were flown on down to 
Bahrain Island. The chief nurse at Bapco had broken her leg, so 
they wanted one of us to stay there to assist the nurses there. 
So Shirley stayed there, and then I went on over to Arabia. So 
I was the first new female face to be seen for a couple of 
years. 

There were just two nurses there: Carol Fitzgerald and 
Ruby Bowman, head of the nurses that were there. And they were 
most anxious to leave. They practically had their bags packed 
and were ready to go as soon as somebody arrived. 

Hicke: Had they been there a long time? 

P. Arnot: They were there during the war years, and you've probably 

noticed something about the "hundred men" in reference here-- 

Hicke: Yes, we need to pick up you from '38 to '44. 

P. Arnot: But they keep talking about, in some of the books we have in 

there by McConnell and Stegner, they talk about the hundred men, 
but they always seem to forget the hundred men and two women 
nurses who were there . l 

Hicke: And there were only two women? 
P. Arnot: Oh, yes. 

E. Arnot: Because families had left, you see. They had evacuated the 
families. Paul can go on to that. 

Hicke: Okay, let's back up a little bit now, and we will-- 

E. Arnot: Then I met Paul, and that was that. [laughter] We were married 
then the first of February of 1945, and they told me that I 
would have my record closed with the words that I was an 
unreliable female employee. 

Hicke: You had to quit? 
E. Arnot: Yes, yes. 



McConnell has written a book called The Hundred Hen. 



175 



Hicke: And they gave you a dishonorable discharge? 
P. Arnot: Well, actually, she didn't quit-- 

E. Arnot: A dishonorable discharge. Imagine how that would go over in 
these days of women's lib! 

Hicke: Oh, isn't that amazing. 

E. Arnot: So then I stayed twenty- four years. 

Hicke: [laughs] Unreliable! Let me just ask you, when you first saw 
Saudi Arabia, what were your impressions? 

E. Arnot: Well, it looked pretty grim. Their automobiles had 

deteriorated, and Dr. I.E. Alexander, who was the chief doctor, 
met me at al -Khobar. I sat in the passenger seat and rolled up 
the window, and it was a piece of plywood. A shamal was 
blowing, that's the wind, the dust storm. 

P. Arnot: That's north. 

E. Arnot: So we drove on up, and he then took me to where I was going to 
live. 

P. Arnot: You were given pretty nice quarters. 

E. Arnot: Oh, yes, we had a half a duplex, Shirley and I. But there were 
no families there, so there was plenty of room in the existing 
housing. By that time, a number of houses of course were built. 
There was a small hospital, and of course a dining hall and a 
recreation- -club house. So there we were. 



Paul's Early Work 



Hicke: Okay, let's go back to '38 and find out what you started doing. 

P. Arnot: Well, I went to work as a petroleum engineer, did the straight 

petroleum engineering work until 1940, when we were bombed. The 
Italians bombed in the fall- -I think it was November, 
1940- -bombed the place. Going back a little bit, I think when I 
first arrived in Arabia, there were seven wives, no children. A 
little later on, they began to build more houses, and they 
moved- -and I think they probably had up around almost--! don't 
know whether it was thirty or not. Then there were a few 
children; I think one child was born there. 



176 



Then the Italians bombed the area, the camp, and they 
evacuated all the women. So that made some of the houses 
available for bachelors, so we began to move into those, and 
they were a little more sumptuous than the old places. 

I was actually- -in 1941, I was on vacation in San Francisco 
when the war was declared. They immediately wouldn't release 
me, so they shipped me back to Saudi Arabia. I spent the war 
years there until after the war. 

Hicke: Okay, let's back up again now. Who did you go to work for? 
P. Arnot: Gavin Witherspoon. 
Hicke: He was head of the--? 

P. Arnot: No, he was the--oh, gosh, I guess he wasI'd call him chief 
petroleum engineer. 

Hicke: And what were you doing? 

P. Arnot: I was straight engineering. 

Hicke: Well, what was the group doing? Exploring for oil? 

P. Arnot: Well, at that time, they had field parties, seismograph parties, 
which I wasn't involved with. They were drilling wells. At 
that time, we had I think four or five drilling crews. That was 
my job, was on the drilling aspect of it, and also on the 
production. Actually, in those days, for example I used to go 
help the oil be shipped through Bahrain. I often was asked to 
go down and gauge the well. Also, you helped out in the 
production end, and so forth. Straight engineering, field 
engineering work. 

Hicke: Did you hear any stories about the early days? 
P. Arnot: In what sense? 

Hicke: About the times before you were there. Did they tell you any 
interesting tales about how the well came in, and that kind of 
thing? Anything that hasn't been already in the books that you 
can recall? 

P. Arnot: No, but you can alwayswith hindsight, you can see where what 
they did was wrong. For example, and it was quite obvious when 
they completed well #7, they had a drill stem test, and it was 
stuck, and it was quite obvious they didn't make any attempt to 
unstick it. Well #2 produced they thought a lot of oil one 



177 



time, and it turned out in fact that actually it produced 
nothing but water, mostly water. They found that out when they 
went to get from the tank, they wanted to get some oil, and all 
they got was water. 

Hicke: Well, that's not such a bad thing either. 

P. Arnot: At any rate, it will be a long story if you want to get the 
early history of the drilling effort. 

Hicke: Well, I've read a lot of that, but I thought if you had some 
human interest type anecdotes -- 

P. Arnot: No, I don't; of course, if you read the books, you talk about 

the bombing, the human interest stories there, some of them are 
true and most of them are exaggerated. 



Weathering the Crises 



P. Arnot: But one of the things that we might mention at this point, we 
had had a number of crises in Arabia. 

Hicke: Crises? 

P. Arnot: Yes. Every time Israel or anybody tried to invade the Arab 

countries, it always produced a problem for us, really created 
quite a crisis. Often we shipped the women out, and gave option 
to men who wanted to leave also-- 



P. Arnot: For example, one Wednesday, I don't knowthey called it Rock 
Wednesday or something- -it must have been about '66-- 

E. Arnot: '67. 

P. Arnot: '67, they surely did move into the camp and did some damage and 
threw rocks and so forth, and turned cars over. At that time, 
they gave people an option to leave. A lot of the women did 
leave, and some of the men did. But it's like with the bombing 
in 1940, I found out you're not able to predict which people 
want to stay, or people you can rely on. The most jolly, most 
outgoing people, will be the first to be on the plane to leave. 

Hicke: Is that right? 



178 



P. Arnot: The other thing about it is, quite a number of the women said, 
"If my husband can stay, I can stay." And they had to be 
shipped out. 

Hi eke: You mean they had to be shipped out forcibly? 
P. Arnot: Yes. 

E. Arnot: But that was early, that wasn't in the '67 thing, because lots 
of women stayed. More women stayed than went. 

P. Arnot: Yes. But when they shipped all the wives out after the bombing, 
some absolutely said, "If my husband is going to stay, I'm going 
to stay, too." 

Now, we found out a little later--! think we made about 
three exoduses, giving people permission to leave. We began to 
find out that some of the women took advantage of it just for 
the trip. 

Hicke: [laughs] And they'd be right back. 

P. Arnot: Oh, sure, yes, sure. But you couldn't depend on the people, you 
couldn't plan on this group of people you wanted to be your 
cadre. You just couldn't do it, because they Just didn't react 
that way. You probably had to get in to see why that is true, 
but anyway, that developed. 

Now, all during the war years and even later, we had 
evacuation plans for people, in case of a major rebellion or 
something like that, we could move people out. Actually, in 
fact, I don't think there's ever been a very successful move. 

Hicke: Where would they have gone? To Bahrain, first of all? 

P. Arnot: Well, it depends on the availability or which way the trouble's 
coming from. Now, Iran was always a threat. And of course, 
later Iraq was a threat. 



Wedding in Bahrain 



Hicke: Let me ask you, Elizabeth, what was your wedding like? 

E. Arnot: Oh. [laughs] We went from al- Khobar on a launch to Bahrain, 

and we were married in the parlor of the parsonage of the Dutch 
Reformed Mission in Manama. 



179 



Hicke: What kind of paperwork did you have to do for that? 

E. Arnot: Well, I don't recall that we had to get a license, but Dr. Van 
Peurson gave us a certificate of marriage. 

P. Arnot: Well, then we went immediately to the U.S. Consul in Cairo -- 

E. Arnot: Oh, yes. 

Hicke: And registered? 

P. Arnot: And registered, yes. 

Hicke: And did he speak English? 

E. Arnot: Dr. Van Peurson? Oh, yes. He and his wife were missionaries 
there in the mission. There was a Dutch Reformed Mission on 
Bahrain, been there many years. They did tremendous medical 
work with the Arabs. And they also had a branch down in Muscat, 
on the mainland of Arabia. 

Hicke: Did you have some kind of festive attire made? 

E. Arnot: No, I was married in a black dress, which horrified my daughter 
later on when she heard about it! [laughter] No, I had no 
ideas of getting married when I went. I didn't take any wedding 
finery. 

Our wedding rings were made out of a British gold sovereign 
by a little local metalsmith sitting on the dirt floor in like a 
little stall. 

Hicke: Is that the one you still wear? 

E. Arnot: Yes. Then we left the next morning on a British flying 
boat- -what were they-- 

P. Arnot: New Zealanders. 

E. Arnot: They were New Zealanders who were flying it-- 

P. Arnot: Navy. Air force. 

E. Arnot: Yes. And from there to Cairo, and we were in Cairo for eight 
days, and then they sent us to Port Said, and we were there 
eight days before we got on a freighter coming to the United 
States. Then we traveled as far as Oran on the freighter where 
a convoy was made up, because the war, you see, was still going 



180 



on. So we went then across the Atlantic to Baltimore in a 
convoy . 

Hicke: Why did you come back to the States? 

E. Arnot: Well, Paul was due for vacation. 

P. Arnot: And she got fired! 

E. Arnot: And I got fired. [laughter] 

P. Arnot: Well, there wasn't any housing in Dhahran. As a matter of fact, 
when we were in Cairo, the first group of women being sent back 
to Saudi Arabia was in Cairo on their way to Saudi Arabia. 

Hicke: Oh, really? So the war in Africa at least was over. 

P. Arnot: Yes. And at that time, things were looking- -and also, things 
from the standpoint of construction and production, everything 
was looking straight up in Saudi Arabia. They had found good 
oil in Abqaiq. 



181 



III LIFE IN ABQAIQ 



Moving to Abqatq 



Hicke: Did you go to Abqaiq when you were there? 

P. Arnot: Oh, yes. 

Hicke: Now you were in Dhahran until when? 

P. Arnot: '46. That is a story. Elizabeth was very much pregnant at that 
time. They called me into the office and told me that I was 
being sent to Abqaiq as drilling superintendent and area 
administrator. Well, it bothered me, because I was apprehensive 
in leaving Elizabeth pregnant in Dhahran. But anyway, I did go 
there. 

Hicke: How far away is it? 

E. Arnot: It was not too far away. 

P. Arnot: About thirty- five miles. But across absolutely nothing but 
sand. No roads. Now, Elizabeth had the baby in- -[pause] 

E. Arnot: December of '46. 

P. Arnot: Yes, December, in '46. And we moved--! moved her to Abqaiq, the 
first wife, and with this --she would have been a 
three -months -old baby? 

E. Arnot: No, no, first of February. 

Hicke: She was barely over a month- -six weeks. 

P. Arnot: And that was quite a thing, over the desert and so forth. No 

medical facilities, no commissary. We had to get our meats and 
so forth from the dining hall. She had no neighbors. 



182 



Hicke: I call that a frontier life. 
P. Arnot: [laughter] It was. 

E. Arnot: Yes. We moved into the first house that was finished, and as we 
moved in, they were putting up the curtain brackets and doing 
finishing, and the Arabs were absolutely astounded. Many of 
them had never seen a white woman, much less one with her face 
completely uncovered, and I had Anne in a wooden Dutch Cleanser 
box. When they heard a baby cry, they really got excited. So 
they unloaded all of our stuff and they carried kitchen stuff 
into the bathroom, and other stuff into the kitchen. It was a 
great sorting-out, but we finally got settled. 

P. Arnot: The bad thing about it is when they drove up to the house with 
Ann and Elizabeth, the bulldozer loading off went through a 
sewer and knocked the sewer line out! [laughing] 

Hicke: Oh, no! 

E. Arnot: And the water was --there was no distilled water, the raw water 
was awful. It was rusty, and so on. Every week Paul would go 
to Dhahran to buy- -well, for meetings and so on, and then he'd 
buy groceries in the commissary and bring back big gallon Jugs 
of water. It was much later in the year before we got water 
that was fairly drinkable. 

Caring for a baby must have been very difficult. 

The company had to build all the power facilities, all the water 
systems, all the sewer systems, all the telephone systems, 
everything. Nothing we got from the community, absolutely. We 
were so absolutely self-contained. People just don't seem to 
understand that. And particularly at Abqaiq in the early days, 
the electric power was always marginal, air conditioning was 
always very marginal. 

Hicke: Did you have generators there? 

P. Arnot: Yes, yes. We had to generate it there in the camp until they 
built the big steam camp, and that wasn't completed until 
probably almost '48, and then we had of course ample power. 

Hicke: Did you plant gardens? 
E. Arnot: No, it was just raw sand. 

P. Arnot: [laughing] The thing about planting gardens- -when we first 

moved there, the darned camel caravan just came right through. 



Hicke: 
P. Arnot: 



183 



E. Arnot: 

Hicke: 
E. Arnot: 

P. Arnot: 



E. Arnot 

Hicke: 

E. Arnot: 

P. Arnot: 

E. Arnot: 

P. Arnot: 

E. Arnot: 



Hicke: 
E. Arnot: 



And the goats would be out there . One time , 1 was hanging the 
diapers on the line, and the goats came up, began to nip away at 
them. 

These are from nomadic herds? 

Yes. There were no rules there for those who lived around there 
in the desert. 

And at Christmastime, Elizabeth had some pine cones out, 
decorations on the front door, and she thought a goat had eaten 
them. She kicked the goat. [laughing] It didn't bother the 
goat's rear, but we didn't see them for a week! [laughter] 

Yes . And then they put up a perimeter fence all around the 
area, and so then we didn't have that problem. 

What did it feel like, Elizabeth? 

Oh, I didn't feel afraid; I never was apprehensive. 

That's the thing, looking back, I don't know why we shouldn't 
have been, but-- 



No. The Arabs were very pleasant, really, 
aggressive toward you or anything. 

You mean the Saudis, no. 



They never were 



The Saudi Arabs, no. They didn't bother you. Oh, sometimes if 
you'd go to a village, maybe they would pull at your dress or 
something just momentarily to get your attention. But they 
never were obnoxious. I never felt afraid. Later on, we got a 
little block of sidewalk, and I had a stroller for Anne. I 
think it was half of a city block. I used to put her in the 
stroller and walk her up and down. The Arabs would sit in a 
line across the street where they were building houses and watch 
me, up and down, [laughter] wheeling this baby. They thought 
that was absolutely something, I guess, far-fetched. Because of 
course the Arab women carried the babies in kind of a sling, you 
know, under their black robes. 

Did you have Arab women to help you? 

No, no. The women never worked in the houses. We had sometimes 
Arab men. But they didn't particularly like to work for the 
women; they don't like to take orders from a woman. 



184 



P. Arnot: But you had the --all of our servants were Goanese, Indian. She 
had a cook and a butler. 

E. Arnot: For a while. Then I decided I wanted to do my own cooking, and 
so then we had a house boy. 

P. Arnot: All the time we were in Abqaiq you had two people, didn't you? 

E. Arnot: I think so. Well, no, I think eventually we didn't, because 
Braganza went in to work for the Hughes . But of course , that 
was a challenge too, to have servants in the house. They came 
in the mornings and then they went home, or back to their 
quarters, for a rest between one and five, and then came back 
and prepared dinner. 

Hicke: Did you have to teach them to cook? 

E. Arnot: Well, you got what was supposed to be a qualified cook, but they 
were trained by the British, primarily, so they did British 
style cooking. 

P. Arnot: Well, you know the anecdote: I was already in Abqaiq, but it 
was around Thanksgiving, time for Thanksgiving dinner, and 
Elizabeth was very pregnant. We had a group of men, and they 
were telling stories and about various Thanksgivings they had 
had. One of them told a story about, he was on a British ship 
coming over around Thanksgiving time, and the captain asked him 
what was the American traditional Thanksgiving dinner. And they 
told him, well, it was turkey and pumpkin pie. 

So he said, well, they didn't have turkey, but they had 
chicken. So they would have chicken, but they did have pumpkin, 
they'd have the pumpkin pie. He said, well, they had wonderful 
chicken, and when he had the pumpkin pie, it was just the raw 
pumpkin out of a can in a shell. We all laughed and laughed. 

Well, when they got around to our dinner- -and the Indian 
cooks were good on meat . The turkey was fine . But he got to 
the pumpkin pie, so it was just the raw pumpkin in the pie 
shell! [laughter] 

E. Arnot: I had gone out and given him the can, and I said, "I'll mix up 
the filling," and he said, "No, no, Madam, I am doing, I am 
doing." So I said, "Well, just use the recipe on the can," and, 
"I am doing." And I didn't realize until later when I asked him 
once if he could read English, he said, "Oh, yes, but I don't 
always understand it." [laughter] I was having a very hard 
time. The baby was born just shortly after, and so I was glad 
not to stand on my feet any more than I had to. So I left him, 



185 



thinking he could mix up the filling and go ahead, but that was 
what happened, he just put it out in the pie shell and served 
it. 

Hicke: That's a great line: "I can read English, but I can't always 
understand it!" 

E. Arnot: Yes. But you could read them a recipe, and you never had to 

tell them again. For muffins, or a cake, or anything, you could 
read them a recipe, and you never had to tell them again. One 
of them said to a woman one time when she got out her cookbook, 
"You've not made this before?" "Oh, yes," she said, "many 
times." He said, "Well, why do you have to look in the book?" 

P. Arnot: But the dead silence when we got to the pumpkin pie! [laughter] 

E. Arnot: Well, they all took it very well. 

P. Arnot: Oh, yes. 

Hicke: They were almost forewarned, you'd have to say. 

E. Arnot: Yes. 



Holidays: American and Arab 



Hicke: Oh, that's good. So you really tried to sort of recreate your-- 
E. Arnot: Oh, yes, holidays and everything. 

P. Arnot: Yes, holidays, Christmas and so forth. We always tried to--. 

Later on, I understand that in Dhahran, they used to have their 
plays around Christmastime, and they had live sheep camels. 

E. Arnot: The nativity. 

Hicke: Yes. 

P. Arnot: And used to use sackcloths on a camel and so forth. 

E. Arnot: And they had big Christmas trees, and there was one group of 

houses built around a circle, and they had a big tree there and 
they decorated that every year. But now they can't have any 
outdoor manifestations of Christmas. And later on, we always 
had a big Fourth of July do, a barbecue and watermelon. They 
would bring in watermelons, and it would be up around the 



186 



swimming pool. That was a great event, particularly for the 
kids. They had donkey races, and all kinds of events. 

Hicke: Donkey races? 

E. Arnot: Yes. [laughs] Don't have horses, you have donkeys. 

P. Arnot: Oh, sure. Oh, yes, we used to have donkey baseball and a few 

other things. You'd hit the ball and get on the donkey to ride 
to first base. Of course, the donkey didn't want to go. 

Hicke: [laughing] I never heard of that. Oh, my. 

E. Arnot: Oh, later we had parades --was that on- -that wasn't Fourth of 
July? I've forgotten what that event--. And by that time, 
they'd developed what they called the Hobby Farm. Many people 
owned horses, very fine horses. 

Hicke: Arabians? 

E. Arnot: Yes. And so they would be quite a group of horsemen and women 
rode them, and then the Boy and Girl Scouts marched, and then 
there would be floats and various things, and it was quite a 
to-do. And then they'd have booths set up around the baseball 
field, and one group would sell hot dogs, and another would have 
homemade cakes and stuff. 

Hicke: Would that be Memorial Day maybe, or Labor Day? 

E. Arnot: No, I can't just remember when it was. I don't remember. And 
Abqaiq had their- -each group had a festival on a different time. 

P. Arnot: Between our festivals and the Arab festivals, it was a rather 
busy time. 

Hicke: What were their festivals like? 

E. Arnot: Well, that's with the end of Ramadan, primarily. 

P. Arnot: Well, they had the others too. I was always invited to the 
amirate for lunches. 

Hicke: On these festive occasions? 

P. Arnot: Oh, yes. 

Hicke: What would they have for lunch? 



187 



E. Arnot: Breakfast- -you used to go for breakfast. 

P. Arnot: I don't remember breakfast. It was always a so-called lunch. 
Actually, nine times out of ten, of course, they had a whole 
sheep cooked, boiled some way, and on a bed of rice, around a 
big tray. In the more sophisticated meals, they would have 
sometimes chicken- -roasted chicken- -well, it wasn't roasted, I'm 
sure it was boiled chicken, passed around, and you ate with your 
hands . 

Hicke: Did they have tea to drink, or coffee? 

P. Arnot: Well, the normal ritual there--! don't know whether Frank and 
these other people talked to you- -the normal ritual would be 
that they would serve tea, coffee in a little cup, and just 
almost a thimbleful of coffee. The coffee is flavored with 
cardamom. The more sophisticated also use saffron. Saffron was 
the ultimate. 

Hicke: In coffee? 

P. Arnot: Yes, just tons of it. 

Hicke: I've never heard that. I've heard of cardamom. 

P. Arnot: Well, then the normal routine, you would sit down, you'd sit 
always on the cushions around the room. The man would serve 
you. There might be maybe twenty- five guys in the room, but 
he ' d only have maybe three or four cups . Then you would pour 
you just a little swig, and then after about three of them, 
you're supposed to pass your cup on down to the next guy. He'd 
pick them up-- 

Hicke: Three cupfuls? 

P. Arnot: Yes, normally three- -sometimes I'd see them drink more than 

that. But normally, the routine is about three cups, and you 
would shake the cup, and then pass it on to the next person. 
And of course, they didn't wash them in between. 

Hicke: No, of course not. 

P. Arnot: The tea was always served later, and it was served in a little 
glass mug, and it was very sweetened. Almost pure sugar. 

Hicke: What was the purpose of these- -you said these were festive- -to 
celebrate their festive days? 



188 



P. Arnot: Yes, or around the end of Ramadan, which is like the end of 
Lent, and so forth. That would be one. They had at least a 
half a dozen others, it seemed like to me. 

Hicke: Was Ramadan a difficult time for you and for the company? 

P. Arnot: No. Well, it was --you would begin to notice toward the tail end 
of Ramadan that people began to get slower and slower, and the 
thing about it is, they wouldn't eat they would abstain from 
food all day, and then they would eat all night, and not sleep 
too much. That was the thing you noticed. We noticed later on 
that it looked like more and more of them began to cheat a 
little bit on it. 

Hicke: Wasn't quite such a strong cultural-- 
P. Arnot: No, no. 



Relations With the Arabs 



Hicke: Well, tell me about the company's and your own particular ways 
of dealing with the Arab population. You had Arabs working for 
Aramco, right? 

P. Arnot: Oh, we had thousands of Arabs working for us. Oh, it's very 
complimentary to the Arabs, they're extremely smart people. 
They're [easily] trainedvery intelligent, and very trainable. 
There were no difficulties with it that way. I would give them 
high compliments, because they really- -it was easier for them to 
learn English than it was for us to pick up their language, for 
example. No, they were very good. 

And, as Elizabeth mentioned, I don't- -all the time I was 
there, thirty years, I don't remember any Arab ever striking an 
American. I remember a few cases the other way around, but I 
don't remember- -they were not belligerent in that sense. And 
they were a jolly sort of people. I don't know whether they sat 
around and told stories or jokes or not, I don't know, but I do 
know that they would sit around and do a lot of gossiping, but 
beyond that, I don't know. 

Hicke: They were very protective of their women, obviously. 

P. Arnot: Well, that's the first question people ask us here: "What was 
your social life with the women?" Well, we never actually had 
any social life with the women. Absolutely not. Now, one or 



189 



two families knew the women folk, but those women spent more 
time in London than they spent in the area, so they were not 
typical . 

Hicke: Very upper class. 

P. Arnot: Oh, yes. We were never invited to their houses, and we didn't 
invite them and their wives to our houses. So we had actually 
no social--. 

Now, the men did- -we attended all these official dinners 
they used to have at the amirate . There were times when a 
visiting dignitary would come through the area- -that was back in 
Dhahran--and the top officials there in Dhahran used to go to 
Dammam and partake of their meals. In the process, you get to 
meet quite a number of noble people, including Haile Selassie 
and Hussein and so forth. 

Hicke: Can you tell me anything about either of those two? Did you 
meet them? 

P. Arnot: Oh, yes, sure. 

Hicke: You're talking about the king of Jordan, Hussein? 

P. Arnot: Yes. 

Now, getting back to food, I want to tell you one incident, 
when I was in Dhahran; I think I was general manager of 
operations at that time. King Faisal was in the area, and I was 
delegated to take King Faisal to the northern area to Nariya. I 
think he was then to meet with the tribes and so forth, and to 
do a little politicking on his part. Now, why they sent me 
instead of the- -Government Relations was very strict and very 
careful of their prerogatives of taking care of any government 
official, but for some unknown reason, I was the person who was 
delegated. 

The amusing thing, he wanted a place to rest, have a nap 
during lunch time. They were at Camp Nariya. Asked one of the 
women up there if I could use her house for him to take a nap, 
she almost fainted. [laughter] So finally, we were able to 
talk her into it, and I said, "Well, we guarantee we won't 
disrupt your house or anything." 

Well, anyway, go flying up, went up in a DC-3, and King 
Faisal sitting just ahead of me, he didn't have his seat belt 
on. So I went up and said- -I pointed to the sign and said, 
"This is the seat belt." And he looked at me and in very good 



190 



English said, "Do I have to?" 
anything, but I backed away. 



[laughter] I didn't say 



Well, we stopped at a couple of places and had their tea 
and coffee and so forth, and finally went to Nariya and had a 
lunch. I was sitting next to the king, and I noticed that he 
had his own special food. He didn't eat the goat that was on 
the tray and so forth. I was struggling. He turned to me in 
very good English and again said, "Apparently, you Americans 
don't like the Arab food." I said, "Well, I like the food, 
and--" 



P. Arnot: I replied, "I really enjoy the food. I have a little difficulty 
eating it with my hands." Actually, they only use the right 
hand. The left hand was unclean. And that was about the end of 
our conversation. 

Well, he had the nap in the house, and the whole front room 
of the house was full of soldiers. He disappeared. When he had 
his nap, he came back out, and of course he had his tea and 
coffee. He was very polite. Then the woman, lady, was very 
thankful that she had put him up. 

Hicke: Was she an American woman? 

P. Arnot: Oh, American, oh yes. 

Hicke: That's interesting. 

E. Arnot: Yes, she said she was never going to wash those sheets again! 

Hicke: [laughs] 

P. Arnot: But she was really nervous, boy, I tell you. 

Well, getting back to the tea and the coffee ritual, the 
local amir, Mohammed, invited- -the once and only time he ever 
invited all the --there were only about a half a dozen wives, I 
think, at that time, down to his majlis to have tea one time. 

E. Arnot: That's his meeting room. 

P. Arnot: All of us were sitting around the table- - 

E. Arnot: No table. 



191 



P. Arnot: No, around the wall, on cushions. And pretty much in the center 
was a very tall Somali, very tall, very black, absolutely- -real 
skinny. He sat all the time. He was interpreter, translator, 
and he kept running his fingers through his toes, which is a 
habit they had. They wore sandals, and at the door, all they 
had to do was kick the sandals off. 

E. Arnot: You should also say that his name was Hassan Ada, and he wore a 
blue pin-striped suit to this occasion with a black Astrakan 
cap, and it was as black as his face, so it looked like his head 
just went right up with this crown of curly black stuff on his 
head. He really was quite a striking thing. 

And it turned out that about six months later he died of 
tuberculosis . 

Hicke: Wasn't it hard to sit on the floor? 

E. Arnot: Yes, it was. 

P. Arnot: Well, there were nice cushions. 

E. Arnot: And you couldn't sit with your feet out. It was very bad 
manners to show the soles of your feet. 

P. Arnot: Oh, yes, you couldn't, yes, you had to--. 

E. Arnot: So we would sit like this, and then we'd try to scoot around the 
other side without--. But it was difficult. 

P. Arnot: Oh, they can sit for hours that way. 
Hicke: Yes, takes a lot of practice. 

E. Arnot: Well, they do it from childhood up. We come into it as adults, 
and it's difficult. 

P. Arnot: Well, when I was sent to Abqaiq as area administrator, there 
must have been maybe a hundred and some-odd construction 
personnel, men, and the drilling personnel must have been around 
fifty or so. The camp was kind of a little out of control. 
They had alcohol at that time, and first instructions I had was 
to bring order to the camp. 

Well, that was a rather difficult job, which I was able to 
succeed in doing. You don't have any police or anything to- -you 
have to do it by persuasion and threats. But I did bring peace 
to the camp. 



192 



Hicke: How did you do it? 

P. Arnot: Well-- 

E. Arnot: He appointed the bad boys to be the monitors! 

Hicke: [laughter] Oh, recruited the enemy! 

P. Arnot: Well, they had built an office building, and before they could 
move into the office building, they decided the requirement for 
a club house was more severe than an office. We stayed in the 
old offices for a couple of years while they used the office 
building for a club house. 

They had an opening night, and they invited some people 
from Dhahran to come out. Well, I knew that we were going to 
have trouble, and I decided to take some action. So as she 
said, I appointed the four town drinkers as monitors. They came 
and said, "Paul, please let us have a drink, please let us have 
a drink!" And I said, "No, until this thing is over with, one 
o'clock, you're having no alcohol." 

And they used to kid me later. I don't know whether they 
were mad at the time or not, but they kidded me later about it. 

Hicke: Oh, that was a great way to get that accomplished. 

P. Arnot: It was a strange thing about some of those people. They could 

get off work at A: 30 or 5:00, whatever time, 5:00, and they'd be 
drunk by- -or would seem to be drunk- -by 6:00. But they always 
seemed to reach this certain level and never seemed to get 
beyond that. And they never caused too much trouble, except 
that they'd just --this wobbly drunkenness. There were quite a 
number of those. 

Some of those people could really drink. That was one of 
the things I learned early: you had the drinking boys, don't 
compete with them. 

Hicke: That's sort of the image of the hard-driving oil-- 

P. Arnot: Well, construction, and- -yes. We had alcohol in here, and of 
course, they always threatened if you- -that's one of the big 
threats I used, if you don't behave, I'll just have to cut the 
alcohol away. And then you get them to police themselves. That 
was the big thing you had to do. That was the big deal. You 
get them to police themselves, and that was a big part of your 
battle. 



193 

Hicke: Sounds like you knew how to do that. 

P. Arnot: Well, I did. Didn't get any knocks on my head either. 



Recreation in Aba aid 



Hicke: Good. Anything else at Abqaiq that we should cover, or move on? 

P. Arnot: Well, of course Abqaiq was a high development period, and that's 
when we developed the oil at Abqaiq, which turned out to be a 
major field and actually made Aramco. Later they then developed 
Ghawar field from there, which is the world's largest field. 
The world's largest, out of Abqaiq. 

Was that located while you were-- 

Yes, oh, yes, absolutely, oh, yes, I was very instrumental 
there. And we had some very good times. It was a friendly 
place, and we made it friendly. 

We had to make our own amusement, a great deal of entertaining 
between families. 

Did you play bridge? 
Oh, yes, lots of bridge. 
Oh, yes, a lot of bridge. 

Lots of bridge. And then there various self -directed groups 
grew up. There was a woman's group, a garden group, and then 
scouts for the boys and girls, and PTA was through the school. 
So things that you'd expect in a small town, they developed. 
And one year we had a summer recreation program for the 
children, and I taught cooking to a group of youngsters. 
Somebody else taught some girls dressmaking, and so on. 
Everybody kind of pitched in and did things for the community. 

P. Arnot: The thing, and this applies to particularly Aramco, the company 
only sponsored athletics. They only had a staff on the 
athletics, but all the other, the people themselves, on their 
own, had what they call self -directed groups, the groups 
Elizabeth mentioned. They totaled about fifty in each district, 



Hicke: 
P. Arnot: 

E. Arnot: 

Hicke: 
E. Arnot: 
P. Arnot; 
E. Arnot: 



194 



and they had three districts, 
activities. 



There was quite a vide gamut of 



E. Arnot: 
P. Arnot: 



Hicke: 
P. Arnot: 

E. Arnot: 

Hicke: 
E. Arnot: 
P. Arnot: 



For example, the religious people brought in, hired, 
brought in to Arabia teachers, they would call them teachers. 
Actually, they had three priests, and had three Protestant 
fellowship, ministers, and they had one Episcopalian I think 
towards the tail end. 

Yes, they had one Episcopalian minister. 

So that was at their expense. Now, the golf courses and were 
constructed by the employees. Of course, they scrounged a 
little equipment and so forth from time to time, which you 
ignored. This Hobby Farm she mentioned, they had I think fifty 
or sixty horses. They had to hire a vet, bring a vet in at 
their expense. And of course, maintained all these horses, you 
had to have exercisers for them and feeders, and the stable 
people to clean the place up, so they had quite a little staff 
of people. 

And the company was very careful not to get into it, 
because as I told some people here locally, they used to- -that 
Hobby group used to fight like cats and dogs. 

Among themselves, or with the company? 

No, no, among themselves. Yes, the operations of it. 
"Someone's stealing my hay," and so forth. 

We also had an art group, and occasionally they'd bring in a 
teacher from outside for a period of, say, six or eight weeks of 
classes . 

The company did that? 



No, the group did. 



As 



Oh, no, the company didn't. The company didn't do anything. 
I said, the company hired, in each district they had an 
athletic--! think they used to call him the director. But the 
main thing, you see, they had the golf, had swimming pools, had 
bowling alleys, had playing fields, and so forth. And the 
maintenance of those required supervision. And that was part of 
their deal. But they did also sponsor competitive sports in 
between the three districts. 

That's always good, if you have more than one group, so you 
can have two groups competing in sports. 



195 



E. Arnot: We had another very successful group called the Dhahran Outing 
Group, they called themselves the DOGs. They arranged trips on 
the holiday weekends and so on to other places, like a group 
would go up to Teheran and Isfahan for a three- or four -day 
weekend. I went to Petra with the group. Then one time they 
had a trip to the monastery of St. Catherine in the Sinai 
Desert. Oh, they went various places. I think once they had a 
trip to Kabul. It was very successful, and that was entirely run 
by an elected group. You were a member, and you had officers, 
and they arranged these things. They'd charter planes and set 
prices . 

P. Arnot: All the time that I was an executive over there, particularly in 
Dhahran when I was the chief operating officer there for ages, 
we only had one incident in which I got, we got involved. The 
DOGs, this group, the Dhahran Outing Group, had chartered a 
sailing boat to go out on the Gulf on a certain day. The day 
came up or near it, and they had predictions of a bad sandstorm. 
And we told them no, they couldn't go. The woman in charge of 
it, she said by God, they were going to go. 

As far as I know, they didn't go. That was the only time 
that we ever had to put our foot down and say, "No" to anything. 
Most of the time we didn't know what was going on. This was 
very successful. 

Now, this place [retirement community], for example, they 
have someone trying to organize and do it for these people, and 
I'm sure that it would be much more successful if the people are 
doing it themselves. But they don't see it quite that way. 

E. Arnot: I think this is the way it's done in all these retirement- - 

P. Arnot: Oh, yes. I can understand it somewhat if you get in the habit 
of having someone do it for you, then you expect to keep on not 
doing it. 



Personnel 



Hicke: Well, while you were in Abqaiq, whom did you report to? 

P. Arnot: I had a drilling superintendent, I had two bosses, Phil 
McConnell in production, and Vic Stapleton on the 
administration. Well now, you have two bosses, then you have 
conflicts. So one time, Phil wrote me a letter and said, "You 
report to me," and I had no choice to give the letter- -he wrote 



196 



a two -and- a -half page letter, which he could have just made Into 
one sentence and it did the same thing. 

Then I gave the letter to Stapleton, and Stapleton didn't 
particularly care for Phil anyway, I knew, and he said, "Well, 
I'll take care of the S.O.B.," and that was the end of it. I 
never heard any more about it. 

Hicke: So he was a little bit higher on the totem pole? 
P. Arnot: Oh, yes. 

Then, I went on vacation, then they formed Abqaiq into a 
district, and I was made assistant manager, district manager, 
reporting to Charlie Bevin, who was an old-time Standard Oiler 
that they had about ready to retire , and in order to find a 
place for him, he was made district manager, which--. But 
anyway, he retired in a couple of years, and I was made district 
manager. Then I reported to Bob King, who was general manager 
of operations. That was in 1950 or so. Then in '54, I was 
transferred to Dhahran to replace King as general manager of 
operations . 



197 



IV BACK TO DHAHRAN, 1954 



Hous ing 



Hicke: 
P. Arnot: 
Hicke: 
E. Arnot: 

P. Arnot: 
E. Arnot: 

Hicke: 
P. Arnot: 

Hicke: 
P. Arnot: 
Hicke: 
P. Arnot: 
Hicke: 



So you moved back to Dhahran. 
Moved back to Dhahran. 
Where did you live then? 

We lived temporarily in a three-bedroom house, and then when Mr. 
Ohliger retired, then we moved to the house -- 

No, that's when he moved to that bigger house. 

Oh, that's right. They built a big house for him over on the 
bluff, and then we moved into the house where the Ohligers had 
lived, 1121. We were there until Paul retired. 

Can you tell me about Mr. Ohliger? Did you know him? 

Oh, yes, I knew him--I still know him; he's still living, as a 
matter of fact. 1 I was never impressed with him, frankly. You 
can even quote me on that. 

As an administrator? 

Administrator, that's right. 

Well, maybe his skills were in more the geology or-- 

Well, that was my end of the work. 

Yes, that's true. 



1 Since deceased. 



198 



P. Arnot: Well, I actually didn't know him in that area, because when I 

went over there, he was manager. I really didn't have too much 
contact with him. When I moved up the ladder and went to 
Dhahran, and actually when I became--! guess when I was made 
senior vice president, that was about the time that he decided I 
guess his future wasn't with Aramco, and he resigned. 



Producing Oil 

Hicke: What were your major challenges then, after you moved to 
Dhahran? 

P. Arnot: Well, to develop and be able to produce the oil fields of Saudi 
Arabia and produce and process threewhen I left, they were 
producing three million barrels of oil a day. 

Hicke: Is that all you had to do? [laughter] 
P. Arnot: Oh, I had a staff. 
E. Arnot: Budget. 

P. Arnot: Oh, I was on the budget committee, that was the board of 

directors, I was on the management committee. You always had 
all kinds of meetings. 



Responsibilities With Aramco Overseas 



E. Arnot: And when did you go to take over Aramco Overseas? 

P. Arnot: Well, actually, I was on the board of directors of Aramco 

Overseas Company for--. I don't know what happened, but anyway 
I was made the chairman and chief executive officer of Aramco 
Overseas Company, which wasn't a particularly challenging job. 

Hicke: Tell me what this was, now. 

P. Arnot: Okay, Aramco Overseas Company had their headquarters in The 
Hague. It was an engineering and purchasing organization, 
strictly engineering and purchasing. They had a large staff of 
engineers there, and they did the purchasing world-wide. They 
had purchasing offices first in London and The Hague. They did 
have, before my time, the one in Italy, that was closed down. 



199 



Hicke: 
P. Arnot: 



We had an office In Cairo, had an office in Lebanon- -Beirut- -and 
we had an office in Tokyo and Sydney. So we had a terrific 
purchasing situation to bring in all our operational items plus 
the capital goods items, which they try to buy worldwide at the 
best price. 

All those logistical- - 

Yes. And of course, they had to provide the means of the 
transportation to get it in. 



More on Work in Dhahran 



Hicke: Well, as head of this producing company, what were some of the 
major problems- -not the Overseas Company, but in Dhahran as a 
chief operating officer? 

P. Arnot: We had about, as I remember, had about 15,000 Arabs working for 
me, and 1,000 or so Americans. Had the refinery; the refinery 
was under me. It was producing, processing about 
2 80 -some -odd -thousand barrels of oil a day. You had the 
shipping problem, shipping that oil. You had the pipelines. 
You had Tapline, our end of the Tapline. And all the oil that 
was produced had to be processed, because it contained hydrogen 
sulfide, so they had to require big plants, big power plants, 
and we had big stabilizer plants, and had big pump stations. We 
had activity. 

E. Arnot: And all this time you had training. 

P. Arnot: Yes, that's right, don't forget training. And the main job 

there was to train the Arabs, and that too was a time-consuming 
job. 

Hicke: So there was an immense amount of construction going on? 

P. Arnot: That's right, construction, and that of course was under me 
towards the end, the last eight years. 

Hicke: What did you spend most of your time on? There were so many 

things to do . 
. 
E. Arnot: You had assistants. 

P. Arnot: Well, of course, I had assistants. You had a staff. 



200 



Hicke: What was the biggest problem or what did you spend most of your 
time on? Or maybe there wasn't any major- - 

P. Arnot: I had to say that when the refinery fell under my jurisdiction, 
I was not a refinery man, so I had to rely more and more on that 
particular group of people who reported to me on the refinery, 
to carry more of the load. 

Hicke: Who was that? 

P. Arnot: Well, various people. At the last time, I think it was Doug 
Ezzell, and he left, and Sullivan was my production man. 

Hicke: Tell me about Tom Barger. 

P. Arnot: Well, okay. The organization when I left there, he was the 

chairman and chief executive officer. He had two senior vice 
presidents reporting to him: Bob Brougham, on relations, Arnot 
on operations. And the thing began to spread down. We didn't 
have any president, or we didn't have any chairman, rather, say. 
Tom was president at the time I left. Later, when I left, they 
boosted Tom up to chairman and Brougham up to president, I 
think, as I recall. 



Life of a Wife in Dhahran 



Hicke: 



E. Arnot: 



Hicke: 
E. Arnot: 



What do you recall as interesting or unique? 
is. 



Your whole life 



Well, it was very interesting, and it was very pleasant, really. 
I was involved in the women's group, and not much in the 
gardening group, but I participated in it when they had the 
flower shows. Then I was active in the PTA. I went to the 
Protestant fellowship, particularly Bible study. Of course, 
there were lots of activities going on for the children. The 
schools were very much like a school in a small American town. 
There were about 400 children when Anne was in school in 
Dhahran. They went through ninth grade, and then the children 
had to go away to school . 

Where did she go then? 

She went one year to Switzerland, and then her last two years at 
[Katherine Branson] in Marin County. And then she went to 
Middlebury College, and later to Harvard. 



201 



Hicke: Where is she now? 

E. Arnot: Well, now she's married to an onion farmer and they live in 
southern New York state. He retired from a career in the 
military. His last post was in North Yemen. He was the 
military attach^ there. 

Hicke: And she was there? 

E. Arnot: Yes. They both speak Arabic fluently, and French. They had two 
of their children there --that is, had them with them there, and 
then had one more after they came back. 



Labor Relations 



Hicke: Well, that brings up something: 
Paul? 



did you have to learn Arabic, 



P. Arnot: 

Hicke: 
P. Arnot: 



Hicke: 
P. Arnot: 

Hicke: 
P. Arnot: 



No. I probably should have, but I didn't. I think I'd still be 
over there if I had ever learned it, tried to learn it. You 
learn enough to get by. 

And did they all speak English? 

They didn't all --no, no, to the contrary. Very few spoke 
English. Very few. Oh, to the contrary. No, you use 
interpreters. But even there, you used to say that those who 
did speak Arabic would always take an interpreter, because you 
always had the fall guy. You came back to some of the 
things --with an operation like we had with all the activity, you 
always seemed to have something that would go wrong. You have a 
bad fire, or you have a big pipeline break, or something would 
happen. You tried to make everything go smoothly, but in spite 
of your best efforts, you just didn't always achieve. 

That's called life, I think. 

That's right. And of course, you had labor problems, and so 
forth . 

Oh, what kinds of labor problems? 

Oh, we had, as I remember we had at least two strikes, or three 
strikes. That was one of the oddest things that I've run into. 
One morning we went to work, and I think it was in Abqaiq, and 
there were police. How they got word and what their 



202 



communication- -apparently it must have been perfect. They just 
absolutely- - 

Hicke: These are the Arabs? 

P. Arnot: Arabs, yes. The workers just didn't show up. 

Hicke: How long were they on strike? 

P. Arnot: Very short time. 

Hicke: What did you do? 

P. Arnot: Oh, they mediated and so forth. Well, there was one instance, 
our local amir- -he was quite an individual. He called the 
strikers in to the football field. He had trucks waiting by, 
and he gave them an order, he gave them two options: either you 
go to work or you get on the trucks. And they opted to a man, 
went back to work. In other words, it must have been very 
marginal anyway. 

Hicke: Did they want more pay? 

P. Arnot: More pay, or some condition. Generally more pay. 



Family Life and Problems## 



P. Arnot: It was really very active management. I was just thinking, this 
was involved in this, at Abqaiq they had a family that had a 
handicapped child. What was her problem, Elizabeth? 

E. Arnot: She had Down syndrome. 

P. Arnot: Yes. So the medical department, school --they got to the point 
where they couldn't handle her, and the kids were picking on 
her. They told the family they had to send her home. 

Well, the wife came home one day, and Elizabeth had talked 
to the woman, and the woman said, "Gee, we don't want to 
send- -we want to leave--" I think they were forcing the daughter 
out, "We've got to take her." And I know, if he would stay and 
send the daughter home, her husband's heart would be broken. 

So I had turned that in and I didn't pay any more attention 
to it. I think in a few days he showed up in my office with a 
big plea to keep the girl, for them to stay and not send the 



203 



girl home, because both of them wanted to go home. He said, 
"Now, if we send the girl home, my wife's heart will be broken." 

So I said, "Joe, you better go back and talk to your wife 
and just straighten this out. Be honest to each other about 
this girl." So they sent her home. [laughs] The wife saw 
Elizabeth and thanked her for what happened. She didn't know a 
thing about it, because we didn't tell her. 

E. Arnot: She said, "I want to thank you for what your husband did for 
us," and I said, "That's nice, but please don't tell me about 
it!" I didn't want to ever get involved in these things. One 
lady called me up one day and she said, "There's two kids that 
lay in wait for my son, and they beat him up every afternoon on 
the way. What am I going to do about it?" 

I said, "Well, I don't like to say anything, but I think 
you better go to the personnel people." And then there was 
another incident with the clinic, and people would come to me 
and say- -and so on. It was difficult for me, because I didn't 
want to give them advice . 

Hicke: They wanted you as a mediator? 

E. Arnot: Yes, and of course, some of them were very timid about 

approaching anyone in the company. They didn't want--. It was 
a man's world. You had to wait for the men to do things. Your 
passport was in the company hands. A woman couldn't leave 
unless she could get her passport, and so on. 

P. Arnot: The district manager at Dhahran was an unusual individual. In 
some ways, I think he had a big heart, but he couldn't exactly 
take- -couldn' t follow through, and he would always run into 
problems. I think I picked up word that he had banned people 
from selling shrimp from house to house. He was smart enough 
that he had Elizabeth, Mrs. Barger, Mrs. Eedes sign a petition. 
[laughing] 

E. Arnot: The petition was to let him continue to sell. 

Hicke: And that was a service you liked? 

E. Arnot: Oh, yes, they brought shrimp right to the house. 

P. Arnot: But he --well, of course, poor old Ned lost that argument. 

Hicke: [laughs] The women weren't entirely left out. 

Did they ever make use of your skills as a nurse? 



204 



E. Arnot: No. Once there was some sort of an emergency in Abqaiq, and 
they asked me to come over. Some men had gotten in an 
automobile accident, and the one nurse was extremely busy or had 
gone. One time, she had gone and the couple of patients they 
had were just left. They didn't try to take care of anyone who 
was very sick out in the field. 

P. Arnot: Well, we had an infirmary more or less there. 

E. Arnot: Yes, and that was about all. I did give some classes in 

prenatal care and bathing a new baby and that sort of thing to 
some of the mothers in the community. And then I gave first aid 
classes to the Girl Scouts. But that was about all I did. For 
a long time, they didn't employ any wives, and then later, they 
began to employ them as secretaries and so on. And then some 
went to work as nurses and dental hygienists and receptionists 
and that sort of thing. 

P. Arnot: Secretarial work. 

Our kids, after they went off to college and we were still 
living there, they loved to come back to Arabia. That was home. 

E. Arnot: High school, too. 

Hicke: They loved to come back to Arabia? 

P. Arnot: Oh, yes. 

E. Arnot: Yes. They were put out if you had vacation when they had 

vacation, if they couldn't go back to Arabia and be with their 
friends. 

P. Arnot: All their friends. 

E. Arnot: Oh, yes. They loved it. 

P. Arnot: That's the thing that I've often faulted our public relations 
people in Arabia, that they never highlighted all the medical 
benefits they provided to the Arabs in the Eastern Province. 
When I went there, for example, there wasn't a doctor, there 
wasn't a- -as a matter of fact, no medical people at all. What 
few (Arabs) that were sophisticated enough and had any money 
used to go to Bahrain to this medical mission which had a doctor 
there. And we provided medical care for the whole Eastern 
Province. 

The sanitation and mosquito abatement and all that, it was 
all created by Aramco. Now, education, we not only trained our 



205 



employees, but we built schools for the sons of the employees. 
Those things should be really highlighted. 

Hicke: That's what I just admire Aramco so much for what they did and 

the way they treated the Arabs. I think that's truly marvelous.. 
I'm sure you had something to do with that. 

P. Arnot: But see, most of the releases will tell you about all the 

production and the exportation, and that was the thing that a 
lot of us faulted this TV program with- -"The Prize," and the 
book [Daniel Yergin, The Prize, 1991] that bring out nothing but 
the exploitation of these countries, particularly in Saudi 
Arabia. 

Now, it may be true, I don't know what the British did up 
in Iran and in Iraq, but certainly you couldn't accuse Aramco of 
doing that. 

Hicke: No, it was much different than the way the British treated the-- 

P. Arnot: Well, that was one of the reasons why the king didn't want the 
British into Saudi Arabia. 

Hicke: He was wise to have Aramco instead. 

E. Arnot: Didn't have much luck with the British. 



The Local Amir 



Hicke: Did you have to negotiate with the Saudi rulers? 

P. Arnot: No, other than the local amir, which God knows, I had plenty to 
do with him. When I went up north with King Faisal, we had a 
the Government Relations department which were very careful of 
their prerogatives and so forth, that no one moved into their 
bailiwick. 

Now, later on, when we had Barger as president, and the two 

of us as senior vice president, I sat in the most high-level 

discussion, merely as a- -not so much as a participant as a 
listener. 



Hicke: What kinds of things did you have to work out with the local 
amir? 



206 



P. Arnot: All these little spiffs and spats that they [Arab workers] used 
to go to him for with their problems and so forth, or with the 
petitions, and then he'd have to call us in and try to 
straighten it out, and normally we would straighten--. He was 
very good; I had excellent relations with him. 

He was a black man who apparently was , had been or was , a 
slave. I know his father was a slave. They had slaves until 
about '62, when that was eliminated by King Faisal. And we had 
quite a number of employees that were either ex- slaves or 
perhaps only- -maybe some still were, I don't know. 

Hicke: From Ethiopia--? 

P. Arnot: No. You would soon pick up the difference of people who were 
slaves there; you could spot them. Most of the slaves were 
big- lipped Nubians big- featured people, which apparently are the 
more docile group. You didn't see any Somali or Ethiopian 
slaves --none. I think the Somalis and the Ethiopians must have 
been the slave traders, went in there, and got those that were 
more docile Negro groups, and I think that's probably true here. 
I don't think you'll find any Somalis or Ethiopian slaves here. 
Our black people here descended from that group of people. 



Hicke: We were just starting to talk about the amir of Abqaiq, who was 
black. 

P. Arnot: Yes. Well, the amir no doubt had been a slave, but anyway, 

getting back to the question I think is more paramount, one time 
I was talking to one of our more prominent Arab employees, who 
actually did a lot of translating, as interpreter. I got to 
talking about certain people, and- -for example, I mentioned some 
man named Baluchi, and I said something about being an Arab. 

He said, "He's not an Arab. He's a Baluchistani. " I said, 
"Well, gosh, he's lived all his life here, he was born here, 
wasn't he?" "No, no, no, no, he's not an Arab." You had to be 
a purebred, almost a Bedouin, to be an Arab. And in our 
workforces, we definitely noticed that there was a tendency for 
the pure Arab to look down on the colored people. 



207 



Noon Day Feeding 



Hicke: Well, one of the things that you said you'd tell me about was 
building the cafeterias. 

P. Arnot: Yes. On one of the visits of King Saud to the company 
headquarters, he decreedor requested, and the company 
agreed- -to provide one meal a day at noontime of high caloric 
value and a lot of spice. Well, the company didn't enter into 
the right spirit of that. At Abqaiq there was a building, more 
of a shelter, for this feeding place. We had a fairly good 
turnout, but we didn't provide any utensils for them to take 
this luncheon. The lunch consisted essentially of rice and 
lamb, with carrots and other vegetables mixed with it. Which 
always looked appetizing. 

Finally we got it up to, I understand the caloric value 
runs over 3200, which is-- 

Hicke: My heavens! 

P. Arnot: It was a terrific meal. They'd save some of it; they never ate 
all of it. 

Well, the thing about it is, they didn't have anything to 
use for holding this food. Then finally, when they protested to 
Dhahran about it, they said, "Oh, the heck with it, if they 
don't eat it, so what." And we thought that was a funny 
attitude. Finally, we were able to talk them into providing 
them trays . 

Well, then the company began to see that the program [noon 
day feeding] had to be sold; it just wasn't moving, the way we 
were treating it. And they then built in Dhahran a beautiful 
dining facility. In Abqaiq, it wasn't quite so nice. But at 
that time, they initially had a fairly good attendance, and then 
it began to taper off. 

Then one day, not a single person showed up in Dhahran, and 
in Abqaiq I think there were three at lunch there. Word got 
around that it was a bread line. 

Hicke: So they thought they were begging for this? 

P. Arnot: That's exactly it. In recent years, in just the past year or 
so, there was an article in the paper about one of the schools 
here, that their cafeteria attendance is dropping off to 
practically nothing. And one of the reasons was that all of the 



208 



E. Arnot: 
P. Arnot: 
Hicke: 
P. Arnot: 



poor people were using food stamps or food coupons, and the rest 
of the people considered the inferiority type thing, and they're 
just boycotting it. So the Arabs absolutely just completely 
boycotted it. 

It was, I'm sure, and I'll be honest, I think it was 
entirely the company' s- -90 percent of the company's fault, for 
not entering the program with enthusiasm, and providing nice 
facilities for them, and providing utensils and so forth, and to 
make them feel like it was nice. So the staff in Dhahran 
absolutely was initially opposed to the thing. 

Did it stop then? 

It stopped, deader than a doornail. No one took it up. 

That's too bad. 

No, to me it was a black mark in our history. 



Raisine Chickens and Vegetables and Stories About Food 



Hicke: So I want to hear the story of the woman who started the 
chicken- and egg-producing business. 

P. Arnot: I think very early, maybe before the war, thereabouts, the 

company hired an agriculturalist, fellow name of Slaugh. He 
began to raise vegetables in our area, then he began to promote 
it with the Arabs. Then he was replaced by a fellow named 
Brown. He was an outstanding individual, and he worked for the 
Arabs in raising all kinds of vegetables, and improving what 
they had. He worked with them in the drainage of their fields 
and so forth. They did a wonderful job, I think one of the 
outstanding Aramco people. 

Then they got interested in the egg production, because 
those eggs were-- 

E. Arnot: You had to break twelve to get one good one. 

P. Arnot: Yes. 

Hicke: They weren't good? 

E. Arnot: No, they weren't good. 



209 



P. Arnot: They didn't take care of them. This woman, who was a wife 

of --his last name was Walter- -but anyway, she started raising 
eggs . Now they used mechanical saws to cut the frozen meat 
[shipped in for company personnel] up to process into steaks and 
to roast. And of course that left a lot of sawdust, which is 
meat to the chickens . 

She was an initial taker of it. Well, her farming was such 
a big success and so forth- - 

Hicke: She fed that to her chickens? 

P. Arnot: Yes. And she began to have competition. The competition wanted 
also the meat sawdust. Veil, then that created a problem, and 
she made a plea to all the high officials except me- -I don't 
know why she didn't pick on me --that she was being discriminated 
against, and she made quite a fuss. But we did get eggs in, but 
they never got chickens as such. 

Hicke: Elizabeth, would you finish off the story? 

E. Arnot: Oh, well, it was only that sometimes the local eggs, whether 
they came from her or not I don't know, but they tasted like 
curry, because they fed them on the scrapings of the local 
eating houses . 

Hicke: [laughs] That's a good story. 

E. Arnot: So you might get a curry -flavored chiffon cake or something. 

Hicke: Oh, I didn't think about that! Wouldn't be so bad if they were 
scrambled, I guess. 

E. Arnot: Of course it was better than during the war years, when we had 
powdered eggs. That was something else too. 

Hicke: Okay, and then speaking of the vegetables, the carrots -- 

P. Arnot: Well, the vegetables, when we initially arrived, they were- -the 
seed had degenerated to the point where the carrots were 
actually purple, I mean purple. They were not a dark purple, 
but a nice, good, light lavender color. That was of course 
corrected by improved seeds. 

Hicke: But that happened because they kept using the seed from the 
previous crop? 

P. Arnot: Over and over again, yes. Nothing new. 



210 



E. Arnot: 



P. Arnot: 



E. Arnot: 
P. Arnot: 



They also raised watermelons, 
flavor. No sugar, no flavor. 



They looked nice , but they had no 



Since we're talking about vegetables, the first two years or 
three years there, we had Imhof garden. The overflow of the 
Imhof tank- -that's the sewage- -spread over a big flat area, and 
I don't know how I was involved, but I got in it someway, but we 
got raising tomatoes, and really the most marvelous tomatoes 
possible were raised from that. But the medical department 
finally caught up with us. [laughter] 

Well, then didn't you have an experimental hydroponic-- 

Yes, but that was --we tried hydroponic, but we didn't have the 
knowledge to make it go. 

But after- -what was his name Brown? 



E. Arnot: 
P. Arnot: 

Hicke: 
P. Arnot: 



E. Arnot; 
Hicke: 
P. Arnot; 



E. Arnot: 



Grover Brown. 

Grover Brown came in, he did marvelous work with the 
developments of fruits and so forth. It was wonderful, 
a wonderful man. 



He was 



Okay, and then I want to be sure and ask you about the locusts. 

Oh, the locusts. I don't remember in Dhahran, but in Abqaiq, 
we've had swarms of locusts come in that actually crawled all 
over the houses. Just thousands, thousands of them. We would 
drive into Dhahran and we'd get into one of those locust 
migrations, and you had to go about a mile or so and stop your 
car and rake them off the-- 

The front, the radiator. 
The biblical plague. 

And when we were drilling al-Jauf , the wildcat well 180 miles 
north of Dhahran, I was several times there when they were 
breeding; you could go, and say five miles on both sides of the 
road would just be black from the young ones. Just absolutely 
unbelievable. And of course, like in Abqaiq, they just 
decimated every plant. They would even just pile up underneath 
the oleanders, which would kill them. 

And the Arabs would go along, they'd take a coat hanger and 
straighten it out, and they'd go along and put them on like 
kabobs on a skewer, and toast them over the fire. They 
considered them a great delicacy. 



211 



P. Arnot: Well, the way they ate them, I think they probably were. I 
watched them eat them, and I'm sure that they were. I was 
tempted myself to eat them. 

Talking about foods : the company gave the employees a 
certain ration of food. They did that almost from the start. A 
certain amount of rice, and dates, sugar, tea, and flour. They 
found out that was the --the personnel people found out I was 
making a trip to Jauf one time to go up to the wildcat, and they 
asked me to make a delivery of the ration to a caretaker, and 
they had a watchman there, stop and give the man his ration. 

Well, I stopped with the ration, so he was a jolly sort of 
person, he came out, and started- -first I gave him his pay, 
which was already counted out and in the bag. I gave that to 
him. He had to count it out. Then I got to his food item. 
Well, he didn't have any containers. Well, I think he had 
containers; I'm sure he did, because actually I could look 
around there. But he had his eyes on the aluminum containers I 
had for my measuring cups. But anyway, I said no. 

We got to an impasse. I said, "Well, I'm going to have to 
leave." And he- -I could see it was like a light bulb in the 
comics. Outside, they wear a kind of nightgown. He pulled that 
up and he flipped off his underdrawers , which was long- -they 
came all down here. 

Hicke: To the ankles? 

Arnot: Yes. So he tied one leg, tied the other leg, and I said, "Now, 
I'll put on one side the flour, and the other"--! didn't work 
too closely because of the sanitation, [laughing] So I drove 
off, and he was happy and I was happy. 

Talking about the types of food, during the war when things 
got tough, we ran out of the white rice. We brought in brown 
rice. Boy, that wasn't acceptable at all. But the thing that 
surprised me was, they loved wheat. We had to substitute wheat 
sometimes, and they enjoyed wheat. 

Hicke: But that was new to them more or less, wasn't it? 



P. Arnot: Well, I think they raised barley at Hofuf. I'm not sure--I know 
they did some, but I think it couldn't have been very much. But 
the wheat was very acceptable . 

Hicke: Well, Elizabeth, tell the strawberry shortcake story. 



212 



E. Arnot: 



Hicke: 
P. Arnot: 
E. Arnot: 
P. Arnot: 

Hicke : 
E. Arnot: 
P. Arnot: 



E. Arnot: 



[laughs] The exploration in seismographic camps down in the Rub 
al -Khali depended of course on their foods from Dhahran. They 
were sent the best of everything. We had very nice things, and 
among other things we had frozen strawberries. There also was 
avocet cream, which was a pasteurized cream that came in 
bottles, but it made wonderful whipped cream. 

A visitor down there said one night at dinner, he was asked 
what he'd have for dessert, and the waiter told him they had 
this, and this, and strawberry shortcake. A couple of fellows 
who worked down there said, "What? Strawberry shortcake again 
tonight!" [laughter] 

Out in the middle of the desert! 

Well, they had one guy, Claudell, they used to call him-- 

Chicken fried steak. 

Chicken fried steak. Every night he had- -he was the camp 
boss- -chicken fried steak every night. 

He was from the South, I bet. 
Oklahoma, I think. 

Oklahoma or someplace. We're talking about food stuff, I think 
about the first year I was in Arabia, sitting in the dining hall 
eating and the steward was there, a fellow name Sheurhamer. He 
was one of these men that absolutely just craved spaghetti. He 
was eating his spaghetti away. And all at once, you look down 
there, they said, "They've got weevils in it!" 

Well, he looked at it, and his spaghetti was half weevils. 
They called Sheurhamer to take a look, and he jumped about ten 
feet in the air, and he said, "I told those S.O.B.'s to strain 
those weevils out!" [laughter] 

Well, we used to get flour with weevils in it. We had two kinds 
of flour sifters: a regular flour sifter, and then one with a 
very fine mesh. If you were having people for dinner who had 
only recently arrived, you used the fine mesh and got all the 
obvious parts of the weevils out, but if you had people who had 
been there a long time, you just didn't bother. 

II 



213 



Hicke: It really does sound interesting. [laughs] 

E. Arnot: And there was a while there before families became reestablished 
that food was brought in in sizes for use in the dining hall, 
the great big tins that held about four quarts. Well, you'd 
have to buy, if you wanted peas, you had to buy one of those big 
tins, so you had peas every night for a week. 

P. Arnot: Or maraschino cherries. Remember we had a whole jar, and then-- 

E. Arnot: Yes, we had a whole jar, a great big jar of maraschino cherries, 
things of that sort. 

Hicke: Well, I think I've kept you talking a long, long time. 
P. Arnot: Well, can you think of anything else? 
E. Arnot: I don't think of anything. 

P. Arnot: Oh, one incident I wanted to mention: I was sent to the New 

York office in the fifties, I guess--! was in Dhahran--and one 
of my assignments was to look over the manpower. As a result of 
my study, I made a recommendation, and actually the management 
did a little better than I expected. I had recommended that 
they'd better reduce the New York office down to about 35. 

And oh, I'd say maybe three years later, I was at a 
cocktail party or some kind of party, and a woman came up to me 
and said, "Are you Paul Arnot?" And I said, "Yes." She said, 
"You're the cause of my baby!" [laughter] I backed up-- 

Hicke: "Who, me?" 

P. Arnot: This was the first time I'd ever seen the person. Well, then 
she said, "I hate you, and my husband hates you." I said, 
"Why?" She said, "Well, you reduced the office, the New York 
office, and we were transferred to Dhahran." Well, she was one 
of these people that her roots were in Newark or someplace. And 
apparently, she said when the husband came home he was so 
wrought up that they had the baby. I thought, well thank God, 
at least I didn't directly cause it! 



Hicke: 



That was very remote. [laughter] 



214 



P. Arnot: And she was a pretty child, too. Do you remember? 

E. Arnot: Yes. 

P. Arnot: I didn't even think the child would ever be taken for mine. 

E. Arnot: No, it was a little red-headed girl. 

P. Arnot: Little red-headed Irish girl. 

Hicke: Well, I think one thing before we stop, I would like to just 
read this. 

P. Arnot: Well, you can read that off, put it on your tape. 
Hicke: You don't need to sit here while I do this. 
[Reads from article on Paul Arnot] 

"Eight years in Abqaiq, and then returned to Dhahran, and 
general manager of operations, '58, vice president for 
operations and director, 1961, senior vice president, 
demonstrated outstanding capabilities in his many roles, 
driller, coordinator, administrator, manager, innovator, and 
decision maker. He had made contributions of great and enduring 
value to the company, its owner companies, and its subsidiary 
companies. The Aramco Overseas Company: elected to the board of 
directors in '61, became chairman in 1963, and chief executive 
officer." And I read this part: "Paul Arnot is an outstanding 
oilman. So thank you from the members of the board of 
directors," and it's signed by Thomas C. Barger. 

And I thank you very much for participating in this 
project, and of helping us to get more information about the 
history of Aramco. Thank you Elizabeth, also. So there we are. 



Transcriber: Shannon Page 
Final Typist: Melody Meckfessel 



Regional Oral History Office University of California 

The Bancroft Library Berkeley, California 



American Perspectives of Aramco, the Saudi-Arabian Oil-Producing 

Company, 1930s to 1980s 



Baldo Marinovic 
FINANCIAL ASPECTS OF ARAMCO 1 S OIL OPERATIONS, 1955-1985 



Interviews Conducted by 

Carole Hicke 

in 1993 



Copyright 1995 by The Regents of the University of California 




Baldo Marinovic, 1985. 



TABLE OF CONTENTS- -Baldo Marinovic 

Interview History 
Biographical Information 

I BACKGROUND 215 

Childhood and Military Service 215 

Early Work Experiences 217 
Yale University 

Research Job at the Carnegie Endowment for International Peace 218 

II ARAMCO 219 

Joining the Company 219 
Treasurer's Department, 1955-1959: Non-dollar Utilization Program 219 

Moving to Saudi Arabia, in 1959 222 

Treasurer's Department in Dhahran 224 

Currency Problems 225 

Local Industrial Development Department 232 

Treasurer, Aramco Overseas Company, the Hague 233 

Transfer to New York 235 

Back to Saudi Arabia in 1968 238 

Oil Boom: Expansion of the 1970s 240 

The Gas Project 241 

Electrifying Arabia 246 

Saudi Arabia on the Fast Track 251 

III ASSISTANT TO THE CHAIRMAN OF THE BOARD 255 

Appointment 255 

Management Development Department 256 

Internal Services Group 259 

Executive Compensation 260 

Executive and Salary Committees 262 

John Kelberer is Appointed Chairman 267 

IV OVERVIEW 272 
What Made Aramco Unique 

Retirement 282 



INTERVIEW HISTORY- -Baldo Marinovic 



Baldo Marinovic worked for Aramco from 1955 to 1985, serving in 
various positions of high leadership. Born in Trieste in 1925, Marinovic 
served the Allied Forces in World War II and emigrated to the United 
States in 1951. Four years later he was recruited for Aramco 's 
Treasurer's Department in New York. In 1959 he was sent to Saudi Arabia. 
In 1961 he went to the Hague as treasurer for the Aramco Overseas 
Company. After another stint in the New York office, Marinovic returned 
in 1968 to Arabia, where he remained until retirement. For three decades 
he worked on complicated currency problems and financial forecasting, 
eventually becoming treasurer of the company, then assistant to the 
chairman of the board under Frank Jungers, then John Kelberer. 

Mrs. Marinovic, Maya, talked off the tape about some of her 
experiences in Arabia, including her founding of a Montessori school. 

Marinovic was interviewed on May 3, 1993, in his home in Austin, 
Texas, where he moved after his retirement in 1985. He reviewed the 
transcript carefully and made a few emendations to increase clarity and 
smooth the flow of the dialogue. 



Carole Hicke 
Senior Editor 



September 1994 

Regional Oral History Office 

The Bancroft Library 

University of California, Berkeley 



Regional Oral History Office 
Room 486 The Bancroft Library 



University of California 
Berkeley, California 94720 



Your full name 



Date of birth 



BIOGRAPHICAL INFORMATION 
(Please write clearly. Use black ink.) 

//7 A-"-^ Birthplace \\ 



Father's full name 



Occupation 



Birthplace 



Mother's full name ^T/V V f\ M ft 

Occupation 
Your soouse 



Birthplace 



M RM (V 



Occupation 



HcX 



Birthplace 



Your children 




L A V ( 



S^. A ^ /" 



/fr/U/U ^ 



Where did you grow up? 

Present community 

Education 



\J 



( f~}~ 



' ' 



Areas of expertise 

M fr/v Pni^ ^ 5- A/ 



Other interests or activities 



Organizations in which you are active_ 



215 



I BACKGROUND 

[Date of Interview: May 3, 1993 

Childhood and Military Service 



Hicke: Let's just start this afternoon with when and where you were 
born and grew up . 

Marinovic: I was born in Trieste, which was Italy at that point, in 1925, 
of Yugoslav parents, let's say upper middle class. At a 
certain point, we were subjected to what by today's standards 
might be considered a very mild form of ethnic cleansing. The 
Italians wanted us out. 

So when I was three years old, we moved to Yugoslavia. We 
lived in Zagreb and later in Split, where I went to grade 
school and high school. I graduated from high school in 1943, 
just a month or two before Italy collapsed, and the whole 
coastal area of Yugoslavia was pretty much taken over by Tito's 
partisans . 

Shortly thereafter, I found myself as a not very willing 
volunteer for the llth Dalmatian Proletarian Brigade of 
Marshall Tito. I spent about five months in that outfit, 
mostly chased by the Germans and occasionally chasing them. 
Eventually, I found myself on the island of Vis, just at the 
time when the Allies, who had landed in Italy earlier, decided 
that the island of Vis, which is farthest out from the coast, 
might be a good advance base for them. 

When the Allied forces started landing on the island, they 
decided that they would evacuate from the island masses of 
civilian population who had retreated there in front of the 
advancing Germans, and also they'll have a kind of a rough 



1 This symbol, y/y/ , indicates beginning or end of a tape side or an 
interruption in the tape recording. 



216 



selection of what was there of armed partisans. I was already 
six foot two, but by then I was down to 140 pounds and looked 
pretty bad, so I was medically evacuated at that point, and 
that's how I wound up in Italy in 1944. 

After I recovered, I was recruited by the Allied forces in 
Italy for an outfit called Psychological Warfare Branch, Allied 
Forces Headquarters, which was a combined British-American 
outfit. It involved radio broadcasting to occupied 
territories, propaganda, leaflet drops, and so on. I worked 
for about a year and a half mostly as a writer and announcer. 

Hicke: Your Italian language skills were-- 

Marinovic: Good, and that's where I also picked up my English, by the way. 
I had hardly any English when I arrived. 

But eventually I was the main announcer on the Allied 
Propaganda Broadcast to Yugoslavia. 

Hicke : Then what happened? 

Marinovic: The war ended, and this particular employment ended, and I was 
in Rome at that point. I didn't know where to go or what to 
do. I had pretty much decided I didn't want to have any part 
of the regime in Yugoslavia, so while waiting to decide what to 
do next, almost as a lark, I registered at the University in 
Rome, thinking I'd just waste a few months maybe before going 
on. 

Well, I never expected that I'd live in Rome for the next 
five years. So I wound up picking up a degree at the 
University of Rome. 

Hicke: Did you have a specialty? 

Marinovic: Yes, economics and business. And eventually, we decided to 

emigrate to the U.S. My mother was with me at that point; that 
was the only part of my family still left. In '51, we came to 
New York, and I had a distant relative who sponsored me. 
That's how we arrived in the States. 



217 



Early Work Experiences 



Marlnovic: Shortly thereafter, I started looking for a job. After 

pounding the pavements for a while, I managed to find a job 
with a Wall Street firm called Dominick and Dominick. 

Hicke: What kind of a firm, accounting? 

Marinovic: No, it was a brokerage, investment banking outfit. I found the 
job because I claimed I was fluent in French. And this may 
sound funny, but this firm had a number of very important 
customers in Switzerland, Swiss private bankers and so on. So 
all the correspondence and communications were in French to 
please the customers in Switzerland. The gnomes of Zurich and 
Geneva . 



Yale University 



Marinovic: Gradually I got involved in other aspects of the firm's 

operation, but I decided pretty soon that this wasn't exactly 
my cup of tea. I couldn't see myself peddling securities for 
the rest of my life. 

Also, I established that my degree from the University of 
Rome was pretty much meaningless in the U.S. Nobody knew 
exactly what it meant. So I found a graceful way out: I quit 
because I went back to school. I went to Yale [University], 
where they had a brand-new program in international economics. 
It was a flexible program, and they had absolutely top-notch 
faculty. I think of my five main professors, four served 
either before or after on the Council of Economic Advisors to 
the president. It was a top-notch faculty. 

Hicke: Who were they, do you remember? 

Marinovic: Well, there was Professor Fellner, there was Jim Tobin, there 
was Henry Wallach, and there was Bob Triffin, who just died a 
couple of weeks ago. Triffin was known as father of the 
European Payment Union. He was quite a well-known individual. 

In a year, I managed to get my masters in International 
Finance at Yale. I worked very hard, but at the same time, it 
was an absolutely wonderful experience. Challenging, 
interesting. 



218 



Hicke: You packed a lot of work Into that year. 
Marinovic: I sure did. 

After I got out of Yale --actually, 1 was offered a variety 
of fellowships and so on, and they were trying to talk me into 
going on for my Ph.D. There again, I decided that I couldn't 
see myself as a university professor. I think it's a wonderful 
life, to be a university professor at a top-ranked university, 
but I just didn't have enough confidence in myself to be sure 
that I'd achieve this. And being an associate professor at 
Podunk U. didn't appeal to me. [laughs] 



Research Job at the Carnegie Endowment for International Peace 



Marinovic: So I said that's enough in the way of 
I went looking for work. I couldn't 
I liked, that was attractive. So as 
accepted a summer research job at the 
International Peace. Basically what 
preparing a publication in anticipati 
session of the U.N. I was doing the 
part on economics and finance. 



academic education. And 
find anything really that 
a temporary measure , I 

Carnegie Endowment for 
they were doing, they were 
on of the General Assembly 
research and writing, the 



It was a very enjoyable experience, associating with very 
interesting people. So after finishing the summer stint, I 
stayed on for almost another year as a research associate, 
assistant editor, and so on. But then again, I decided that 
while this was a wonderful life, I felt that I should try to do 
something that's more in the nature of a career. 



219 



II ARAMCO 



Joining the Company 



Marinovic: So I was busily looking around while I was working there, and 
through my Yale contacts, through one of my professors, I 
approached Standard Oil of New Jersey, now known as Exxon. I 
was interested in a position in their finance organization. 
They told me at that time they didn't have anything. 

There was, however a company called Aramco, which was at 
that point one of the subsidiaries of Standard Oil of New 
Jersey [Standard Oil of New Jersey was one of four owner 
companies of Aramco] . They asked me if I was interested in 
Aramco, and did I know anything about Aramco, had I ever heard 
anything about Aramco. I said yes, I knew something about 
Aramco. And, "I'll check with them." So I was interviewed by 
Aramco, and-- 

Hicke: Who at Aramco? 

Marinovic: The assistant treasurer and the treasurer in the New York 

office. The treasurer at that point was Ed Voss, who is still 
a very dear friend of mine. In fact, yesterday we spent half 
an hour on the phone. He lives in Maine. The assistant 
treasurer was Harold Spiegel. They interviewed me and they 
re -interviewed me, and eventually they hired me. That was 
March 1955. I was hired as a financial analyst in the 
treasurer's department. 



Treasurer's Department, 
Program 



1955-1959: Non-dollar Utilization 



Marinovic: My main responsibilities, after I got my feet on the ground and 
became a little bit familiar with what was going on, was 



220 



working on the so-called Non-dollar Utilization Program. This 
was in the good old days when the dollar was almighty, and most 
of the European currencies were not convertible. Exchange 
controls, and so on. 

Aramco was told by its owners, who were also selling 
Aramco's oil, that their ability to sell oil and products in a 
number of European countries was limited by their ability to 
use the currencies of these countries. 



Hicke: I see where the program comes in. 

Marinovic: So at that point, Aramco was told, "Do your best to use as much 
as possible in the way of sterling, French francs, Dutch 
guilders, Italian lira, et cetera." At that point, Aramco 
dreamt up all kinds of ways and means of using these 
currencies, particularly by developing purchasing operations in 
all those countries. 

Hicke: Could you give me just one quick example? 

Marinovic: Well, for example, we, Aramco, had set up an office in The 
Hague called Aramco Overseas Company, a subsidiary company. 
Its main purpose was trying to find throughout Europe sources 
of materials that Aramco could use in its operations instead of 
using U.S. -produced materials. At the same time, we tried to 
recruit people who would be paid in those various local 
currencies. We tried to get as much of our engineering done by 
European firms as possible. The main office of this subsidiary 
was in The Hague, but they had offices in Rome, in London, in 
Tokyo, and so it was quite an operation. 

Our role in the treasurer's department was basically 
trying to match the demand for these various currencies by our 
various operating units with the problems that our owners had 
in disposing of these currencies. 

Hicke: Let me interrupt again. Your relationship was sort of to 

mediate between Aramco Overseas and the owner companies to-- 

Marinovic: I'll just explain very briefly. We would get forecasts from 

these various purchasing offices saying for example "All right, 
over the next three months, we'll probably be able to buy in 
England X million pounds worth of material." 

Hicke: Because this is how much British sterling you have? 
Marinovic: No, they said, "That's how much we can do." 



221 



Hicke: Oh, okay, we're starting from the other end. 

Marinovic: "That's how much we can do, the maximum that we can see in the 
way of what we can buy, or how much engineering we can have 
done and so on." And these various offices would supply 
forecasts to us. 

Hicke: To you in the program? 

Marinovic: Yes. We would then look at this thing, and then we would go 

back to the shareholder companies and say, "All right. This is 
the way it looks in the way of what we can use of sterling, 
French francs, Japanese yen, whatever." And they would say, 
"Fine. It's not enough, but we'll take it." [laughter] It 
was always, "It's not enough." 

What we had to do then was make arrangements so that the 
crude oil and the refined products we were selling to the 
shareholders would be paid in part in sterling, French francs, 
Japanese yen, to the extent we could use these currencies. The 
balance was always paid in dollars. And that meant 
coordinating between the four owner companies and our thirty 
bank accounts spread all over Europe and Asia. This was a very 
interesting, kind of frustrating, but according to the 
shareholder companies, an essential effort, because they said 
that simply they could not sell more in those countries unless 
they could use the local currency that they received in 
payment. 

Hicke: That's a really interesting problem. I hadn't heard anything 
about that before. How many people were working on this in 
your office? 

Marinovic: Well, the whole treasurer's department in the New York office 
was about thirty- five people, and the group that was handling 
this particular aspect was about seven, eight people. 

Hicke: How long did this go on? 

Marinovic: Well, it went on for a little bit longer, and then the European 
currencies started getting stronger and stronger, and the 
dollar started getting weaker and weaker, and eventually the 
European currencies became convertible. But this was after I 
had left the New York office. So during my whole period there, 
from '55 to '59, this was one of the areas of concentration. 

Hicke: Would you consider that it was a success? 
Marinovic: Yes, it was definitely a success. 



222 



Hicke: 
Marinovic: 



Another aspect of the non- dollar utilization program where 
we were quite successful, and this was handled mostly in 
Arabia, was convincing the Saudi government that part of the 
payments going to the government- -taxes and royalties- -should 
also be in these currencies. The government did accept part of 
the royalty and tax payments in sterling and French francs for 
a while. 

Who worked that out? 

It was our top management in Arabia. At that point, 1 was a 
peon in New York, so I wasn't involved very much with that. 
Except I would always be in the middle as we were handling the 
flow of currencies back and forth. 



Moving to Saudi Arabia, in 1959 



Marinovic: All right. In 1959, I was told that I would be transferred to 
Arabia. Now you have to understand- -and this was unique for 
Middle East concessionaire companies- -that our top management 
was in Arabia. Our chairman was in Arabia, our president was 
in Arabia, most of our vice presidents were in Arabia. New 
York was just the New York office. It was quite clear that if 
you wanted to make a career in Aramco, you had to go out to 
Arabia. New York was just the backwater, in a certain way. 

So I was interested, and I said yes. It involved also a 
pretty nice promotion. So in July of '59, I left New York. 

As a little aside, on the way to Arabia, I stopped in 
Monte Carlo where my current wife then lived with her family, 
and we became officially engaged. Then I went on to Arabia. 
At that point, the housing shortage was such that you had to 
wait for a considerable period of time before you could bring a 
family. Eventually, when I accumulated enough housing points, 
I went back to Monte Carlo, we got married, and I brought her 
back to Arabia. 

Hicke: Her first name is Maya, and what was her last name? 

Marinovic: Maiden? 

Hicke : Yes , her maiden name . 

Marinovic: Ah, you won't believe it, because there are just too damn many 
consonants, but it's [spells] Krnic . 



223 



Hicke : Is that Yugoslavian as well? 

Marinovic: Yes, her family is also of Yugoslavian origin. They also 

escaped after the war, and they were living in Monte Carlo. I 
met her there by sheer chance. 

Anyway, I arrived on July 20, 1959, in Arabia, on the 
Camel. Aramco at that point had an airline of its own. It had 
three DC-6Bs that flew twice a week, New York-Dhahran. You 
would fly New York to Amsterdam, overnight in Amsterdam; the 
next day you would fly on to Rome and Beirut, and then from 
Beirut on to Dhahran. 

Hicke: Had to gas up every- - 

Marinovic: Yes. And it was quite fancy. We even had sleeping bunks, a 
limited number of sleeping bunks, and these were for pregnant 
ladies or ladies with small children and so on. If there 
weren't any on the plane, then I guess it went by seniority, 
who gets the bunks. 

Hicke: How long did it take from Amsterdam to Dhahran? 

Marinovic: Two days. 

Hicke: Two days? All that time on the plane? 

Marinovic: Well, no, you would leave New York in the evening, arrive in 
Amsterdam the next day, overnight in Amsterdam, and then in 
the morning, you would take off from Amsterdam and in effect go 
all the way through. 

Hicke: And that was a one -day- - 

Marinovic: Stop in Rome, stop in Beirut, and then arrive in Dhahran at 
2:00 p.m. roughly. It was July 20, 2:00 p.m. It must have 
been about 115 degrees. Sand was blowing- -not a real 
sandstorm- -but there was this haze. I remember stepping out of 
the plane, and the thing hit me like a sledge hammer, the heat. 
The moment I set my foot on the ground, I said, "All right, the 
next plane leaves forty-eight hours from now, I'll be on the 
plane come hell or high water. There's no way anyone can live 
in this place." [laughter] 

Hicke: And ten years later, or whatever- - 

Marinovic: A couple of people from treasurer's were there waiting for me. 
At that point, they didn't have a terminal, but there was right 
at the edge of the airport something like a shed- -without 



224 



walls, Just a roof- -covering a long bench. Now, on one side of 
the bench were the customs and immigration people, and on the 
other were the customers, newly arrived. We would be slamming 
those suitcases up on the counter, and they would look through 
them, whoever was waiting for you would be there, and then 
they would pack you in a car and off you would go to Dhahran. 

Well, once 1 came to Dhahran and I saw how green it was, 
and I came to my air-conditioned room, I somehow was a little 
bit pacified. [laughs] But I still had doubts that I would 
stay very long there. 

Hicke: Were the cars, or whatever you rode in, air conditioned? 

Marinovic: No. And you couldn't see anything until you came into Dhahran 
because of this haze, just this desert, and oh, the heat was 
awful . 

Hicke: Is it flat? 

Marinovic: It's a little bit hilly there. It isn't completely desert. 

There are little bushes and a little bit of this and that, but 
pretty dismal during the summer. In good season it is great, 
but during the summer, it's pretty dismal. 



Treasurer's Department in Dhahran 



Marinovic: Well, in the treasurer's department in Dhahran, or as we called 
it, SAO-- 

Hicke: What's that stand for? 

Marinovic: Saudi Arabian Operations. NYO was the New York office, SAO was 
the Saudi Arabian Operations. Or, as the old-timers used to 
call it, the field. "I am going to the field," or "last time I 
was in the field." 

Hicke: I see, as opposed to headquarters. 

Marinovic: Yes. I arrived there, and I was appointed to be finance 

administrator, which was kind of the number two man to the 
assistant treasurer, who was running the treasurer's department 
in Dhahran. 

Hicke: Who was that? 









225 



Marinovic: That was a gentleman by the name of Dick Hawkey, like Hawkeye 

without the final "e." [spells] Basically, I had under- -maybe 
it's easier to understand what I was not doing. We had a 
cashier's department that was handling cash and bank accounts 
and so on. We had an insurance department that was handling 
the insurance area. And everything else, all the staff work, 
that was in my area. 

Hicke: How large was your staff? 

Marinovic: Oh, I had about a dozen people at that point. 

Hicke: Americans? 

Marinovic: Three-quarters Americans, and a few non-Americans- -one Saudi, 
one Italian- -it was heavily American, the staff area. The 
cashier's area, to the contrary, was heavily Saudi and third- 
country nationals. 

Hicke: Did you have an American citizenship then? 
Marinovic: Yes. Oh, yes. Since '56. 

Now, one of the main problems we had at that point in the 
finance area in Saudi Arabia was the question of simply having 
money. Shortage of cash. 

Hicke: Oh, you mean actual stuff to put in your hands? 

Marinovic: The Eastern Province where we were operating was separated by 
desert from the capital. There were no roads going through. 
It was isolated. The government itself wasn't very well 
organized. There was no central bank to speak of. There was 
something resembling a central bank which was called the Saudi 
Arabian Monetary Agency. 



Currency Problems 



Hicke: Were you still having to deal in riyals, silver coins? 

Marinovic: Well, this was the problem: getting enough riyals to meet our 
payrolls. Now, for background I have to go back in time, and 
I'm talking about the days before I arrived in Saudi Arabia. 



Hicke: 



I'd like to get some background. 



226 



Marinovic: In the Eastern Province in Saudi Arabia early on, let's say at 
the time that Aramco started its activities there in the 
thirties, the prevailing currency was Indian rupees. There 
were also in circulation some Maria Theresa silver coins, the 
thalers. Various gold coins were also in circulation, but 
there wasn't a universally accepted currency. 

When Aramco started gearing up after the war, the central 
government started getting some receipts from oil, and it 
started coining, minting, currency. In fact, Aramco helped 
them, arranged the minting in Mexico of silver riyals, and then 
transporting the silver riyals back to Saudi Arabia. Same 
thing with gold sovereigns. But we always had problems getting 
hold of enough cash to pay our employees and for whatever 
requirements we had locally. 

Hicke: Do you recall how much a riyal exchanged for in dollars? 

Marinovic: At that point, the silver riyal was about four riyals to a 
dollar. 

Hicke: About like a quarter. 

Marinovic: Right. We used to arrange for the government to mint some more 
silver riyals, and then we would get these crates of newly 
minted silver riyals stacked up in our cash offices up to the 
ceiling. At that point, there was no paper currency. I'm 
talking about the late forties, early fifties. So all the 
payrolls had to be met in silver riyals. And every time we had 
a biweekly payroll, we would send a couple of Kenworth trucks 
filled with silver coins out to the districts. And the men 
would line up-- 

a 

Hicke: You were just saying they have to take their hats off-- 

Marinovic: Take the hat off, or the gutra, and scoop up the silver riyals 
and walk away from the window. It was quite a nightmare 
logistically, to haul all the silver riyals in. 

Hicke: Where did they put them? Did they have something, a pocket in 
a robe or--? 

Marinovic: They had a little satchel or something, or put them in the 
thobe . 



227 



Later, in the fifties, the Saudi Monetary Agency 
introduced something that looked like paper money, even though 
officially it wasn't money. It was called pilgrim receipts. 

Hicke: They were first issued to the Mecca pilgrims? 

Marinovic: Pilgrims, bound for Mecca. But they fairly quickly became 

universally accepted. Now, the main reason why the government 
did not put out proper paper currency was to a certain extent 
the religious problem. Because there was a religious ruling 
that you cannot exchange something that is equal for something 
that's not equal. And obviously, paper is not equal to coffee 
or wheat or beans or anything else. So it had to be silver or 
gold. 

Hicke: Was this prevention against usury? 

Marinovic: It was a combination of prevention against usury, and also 

distrust, basically, of paper money, particularly paper money 
to be issued by a somewhat unproven government in Riyadh. 

Hicke: But was that in the Koran, or the Shariah? 

Marinovic: Well, that was an interpretation. Now, we had some rather 
interesting episodes, one that I think is worth mentioning. 
Just, oh, a few years before I arrived in Arabia, we had such a 
shortage of currency that we decided to issue a company scrip 
to our basically expatriate employees that they could use in 
the supermarket, in the barber shop, in the beauty shop, in the 
snack bar, and so on. And we printed up a certain amount of 
this scrip. 

And everybody was happy, except of course the scrip found 
total acceptance in the whole surrounding area. 

Hicke: You used it on the economy? 

Marinovic: Not directly, we provided it only to our employees, but it was 
100 percent acceptable, and the stuff started circulating in 
the nearby Arab towns. And all of a sudden, we had this 
thundering message from the government in Riyadh saying, "Who 
do you think you are, printing money? Cease and desist 
immediately! " 

So, we said yes, and we issued orders that all the scrip 
had to be redeemed, over two days the following week, and after 
that, it was going to be without value. So the two days came, 
and people lined up at windows and were turning in this scrip. 



228 



About the middle of the second day, somebody in the 
treasurer's office said, "You know, there's something strange 
going on. We're getting an awful lot of this scrip in. We 
still haven't counted how much, but I'm a little bit uneasy." 
Well, it went on, and at the end of the second day when they 
counted it, they found out that they redeemed 150 percent of 
what they ever issued. 

So the immediate thought was that somebody printed up some 
on the side, but there was nobody in the area with the 
technical skills required. And after a great deal of 
investigation, we finally found out that apparently some smart 
fellows in the cash office were taking it in at the window and 
passing it out through the back door. The scrip was simply 
recirculated. They never caught the white guys. 

Hicke : Good heavens ! 

Marinovic: After I arrived, these so-called pilgrim receipts were in full 
circulation, and we were using them to pay our personnel. 

Hicke: Within Aramco? 

Marinovic: Yes. Now, the problem was always getting enough of these 
pilgrim receipts. We had to send one of our planes to 
Jiddah--even though Riyadh was the capital, the ministry of 
finance was in Jiddah, the main commercial and banking 
center- -and plead with the government to be sure that they had 
rounded up enough of these pilgrim receipts for us to load up 
on the plane and bring them back for our payroll. It was a 
constant struggle. 

At a certain point, however, the government started 
spending money much faster than it was making. Inflation 
occurred. The government was very profligate under King Saud, 
who was the first successor to the old King Abdul Azziz. They 
totally lost control of things. The government was indebted to 
everybody, and the value of the riyal started declining rapidly 
to the point where the silver content of the coins far exceeded 
the value of the riyal vis-a-vis the dollar. 

At that point, obviously, all the silver riyals 
disappeared from circulation, the old Gresham's law- -bad money 
chases out good. We had in our vault something like 115 tons 
of silver riyals, which were totally segregated and which 
represented employees' savings, under the savings plan of the 
company . 



229 



Hicke: 
Marinovic; 

Hicke: 

Marinovic: 

Hicke: 



Because of Islamic strictures on interest, the only thing 
we could do with this money was to hold it in our vault. 
Eventually, the value of the silver in this 115 tons of silver 
coins far exceeded the value of the riyals. So we decided to 
benefit our employees, and we contracted to sell these silver 
riyals to a German smelter. 

The ship arrived, and I had arranged a large group of 
carpenters, company carpenters, who were making boxes in front 
of the cash office [laughter], and our treasurer's employees 
were filling the boxes with silver riyels, loading them on 
trucks, and sending them to the port where they were being 
loaded aboard this ship. It was quite an operation. 
Eventually they were smelted down, and at that point we told 
the employees, "All right, you had 100 riyals in your savings, 
now you have 150 riyals, because we utilized the silver." 

What are the legal ramifications that you had to go through to 
do this? You didn't have to tell anybody? 

None. There were no exchange controls at that point at all. 
We could do whatever we wanted to do with these things. 

And did the employeeswere these Arab--? 
Saudi Arab employees, yes. 

And did they get in trouble for getting back more than they put 
in? 



Marinovic: No, because it wasn't interest. 
Hicke: But it wasn't equal value. 

Marinovic: It was just as if he had a bag of dates that he bought for one 
price and sold it for a higher price. This was perfectly fine. 
Profit was acceptable; interest was not acceptable. 

Now, let me give you another little illuminating story 
about the environment there. One day I received a call from 
our vice president of finance, and he said, "The governor of 
the Eastern Province, Amir Bin Jiluwi, is going for medical 
treatment to Europe. He wants a $200,000 loan and is sending 
somebody to pick up the money within the hour." [laughter] 

Now, you have to know that Bin Jiluwi was the son of the 
old man Bin Jiluwi, who was the right-hand man to King Abdul 
Azziz in the conquest of Riyadh and the establishment of the 
House of Saud on the throne of Saudi Arabia. This Amir Bin 



230 



Jiluwi was an absolute terror. He was feared by the whole 
population of the Eastern Province. I mean, he had no 
hesitations in having people beheaded or hands chopped off. But 
at the same time, he was very fair and highly respected. He 
was just fierce. 

Hicke: Are you talking about the father? 

Marinovic: The son also. The father was just as fierce and righteous. 
You know the famous story about the father; he was at that 
point in Hofuf, which was the capital of the Eastern Province. 
One day a man came to see him. Bin Jiluwi saw him, and asked 
him what he wanted, and this Bedouin said, "I was riding my 
camel, and all of a sudden along the trail, I saw a bag that 
was lying in the sand. So I got off my camel, and I found out 
that it was a bag of dates that somebody had dropped. So I 
want to report that there is this bag of dates sitting in 
such-and-such a place." 

The amir said, "How did you know it was a bag of dates?" 
He said, "I poked it with my big toe." And the amir said, 
"Fine. Now, here's a reward for reporting this," and then he 
called his slave, "and now cut off his big toe for touching 
something that wasn't his." 

Hicke: Wonderful person! 

Marinovic: Anyway, so I rushed down to the cash office and I said, "Do we 
have any greenbacks?" We scurried through our reserves, and we 
managed to accumulate $200,000 worth of greenbacks. We were 
still finishing counting when all of a sudden this old Bedouin 
type in a thobe with a hennaed beard showed up with his camel 
stick, and he had a boy who was driving a pickup. He asked for 
the money. 

After the usual exchange of pleasantries, I said, "Well, 
fine, would you like to come in, so we can count the money?" 
He gave me this withering glance and he said, "We trust 
Aramco." And he just had the boy pick up this crate of money 
and take it in the pickup, and off they went. 

Now there was a rather interesting conclusion to this 
episode. Two months later, I had a call from our local company 
representative in Dammam saying that "Amir Bin Jiluwi is 
sending back, returning the money, the loan. Somebody's coming 
up to Dhahran." I said, "Fine." So I thought I would see this 
old gentleman again, and went down to the cash office. In fact 
a few minutes later he arrived. 



231 



He had riyals; he didn't have dollars. So there were a 
couple of big bags of riyals. He had this boy take the riyals 
out of the truck, dump them in front of the cash office, and 
then he started taking leave. I said to myself, "I don't know 
what's in those bags. What do I do now?" And then I decided 
that there was no way I could ask him to wait while the money 
was counted. I just had to trust him. 

After the old man left I had my cashiers count the money, 
and it was actually five riyals over, so everything worked out 
fine. 

Hicke: Oh, that's a great story, that really is. Those are probably 
the good old days that you couldn't get away with any more. 

Marinovic: Exactly, that's exactly it. You know, we would send our 

payrolls, which in those days were several million dollars 
worth of riyals, out to the districts on payday. And what we 
had was one driver in a beat-up old pickup. No guards, 
nothing, no protection whatsoever. 

Hicke: Not exactly an armored car with outriders! 

Marinovic: Nothing. And everybody knew the day of the payrolls. You had 
to drive about forty miles in one direction, in the desert, and 
stop in front of the cash office, and there they would unload 
all these riyals. 

Hicke: Did you ever have a problem? 
Marinovic: No. Never. 

I'll just fast forward a moment. In the late seventies, 
during the big boom, we became a little bit concerned about the 
security of these cash movements. 

Hicke: This was still going on in the late seventies? 

Marinovic: We had millions and millions of riyals and dollars in these 
cash offices inside so-called vaults, which were totally 
unprotected, and we were still hauling this money in a 
Volkswagen van. At that point, somebody had the idea of 
bringing in a security firm, Wackenhut, to make an survey of 
our arrangements. And these people almost went berserk when 
they saw how we were handling money. It was just beyond their 
comprehension. You know, we would haul $3 million worth of 
riyals at a clip in this Volkswagen van, and at destination 
they would just dump these bags in front of the cash office. 



232 



They wrote their report, in which they said they've never 
imagined that anything like this could exist in the world. 
Anyway, we did then improve our procedures somewhat, because 
also by then there was quite an influx of foreigners into the 
Kingdom, Filipinos particularly, who were rather tricky 
and- -anyway, that's an aside. 

Let's get back to my first day in Saudi Arabia. As I 
said, handling the overall cash problem was probably my biggest 
concern at that point. I also had the relations with the 
various banks in Saudi Arabia. At that point, we had one Saudi 
bank, we had a Dutch bank, we had a British bank, we had a 
French bank. We needed them, they needed us very badly. So we 
had very close relations with these banks and bankers. 



Local Industrial Development Department 



Marinovic: My third area of activity that was particularly interesting to 
me was working with our Local Industrial Development 
Department, to help local entrepreneurs start businesses and 
run businesses, and in effect, start doing things that Aramco 
was doing because there was nobody else that would or could do 
it, but that an oil company normally doesn't do. We had 
company laundries and beauty shops and- -you name it, we were 
doing everything. 

Hicke: A small town. 

Marinovic: So we had this Local Industrial Development Department that was 
helping local entrepreneurs start businesses, develop 
businesses, from a technical point of view. I had to scratch 
up the money. In other words, we would work with the banks- - 

Hicke: Loaning the money? 

Marinovic: No, we tried always to get the banks involved. Tried to get 

the banks to loan the money, maybe with our guarantee, and this 
was also quite an interesting exercise, and that's how I met 
quite a few of the local entrepreneurs. Most of them were just 
starting, and of course later some of them became millionaires 
and even billionaires. 



233 



Treasurer. Aramco Overseas Company, the Hague 



Marinovic: While all these things were happening, our first child was born 
in Arabia, son Michael. In 1961, after two years in Arabia, I 
was told I was being transferred to The Hague. In The Hague, 
as I mentioned earlier, was the head office of Aramco Overseas 
Company. When I arrived in The Hague, and I was elected 
treasurer of Aramco Overseas Company. 

There again, I was dealing quite extensively with the 
European banking community, and also to considerable extent 
with the European monetary authorities. I would go and talk to 
the Bank of England about our utilization of sterling, I would 
talk to the French ministry of finance about our utilization of 
French francs, and so on. 

While in The Hague, our second son was born. The Hague 
itself was a pretty boring place. But fortunately, it was near 
everything else, so even though we were, let's say, in our 
breeding season, we took quite a few short trips on weekends 
and so on, and we enjoyed it thoroughly. 

Hicke : Tulip fields in bloom every year, probably. 
Marinovic: Right, the Keukenhof. 

I had also another unofficial role in The Hague, which was 
quite interesting. Our senior vice president, Relations and 
Finance, Bob Brougham, who was stationed in Arabia and who 
later became chairman, had established a network of unofficial 
contacts with the oil companies operating in London. I was 
charged of pursuing and maintaining these contacts. 

Hicke: You mean all the major oil companies? 

Marinovic: Right. Whether affiliated or nonaf filiated. And basically 

what I would do, I would go to London, and go and chat with the 
British Petroleum people, the Iraq Petroleum people, the Gulf 
people and Iranian Consortium people, then. Of course I also 
visited the London offices of our shareholder companies. 
Basically, it was just finding out what's happening. 

Hicke: Were you there during the negotiations for the consortium? 
Marinovic: Well, no. That was earlier. I was there in '61 to '63, see. 
Hicke: Oh, that's right; that was in the fifties. 



234 



Marinovic: Basically it was finding out what's going on, anything new, 
kind of the general atmosphere, no trade secrets or anything 
else. They were curious to know what was going on in Arabia, 
and I would spend two days maybe visiting for an hour or two 
with various people. And then I would send a report back to 
Bob Brougham, which was completely outside of channels. I 
mean, this had nothing to do with my treasurer's role; it was 
just this separate bit of work I was doing which I found also 
very interesting. 

Hicke: Yes, indeed. 

Marinovic: Besides, it allowed me to take in two plays a month in London, 
[laughter] 

Hicke: Can you recall who were some of the people that you talked to 
in the other oil companies? There were probably different 
people all the time. 

Marinovic: They were different people. One gentleman I remember vividly 
is a Mr. Herridge, who was managing director of Iraq Petroleum 
Company. And then there was a Mr. B. P. Gwinn, who was a 
mid-level individual in British Petroleum. I also remember 
very well a delightful gentleman named Mr. Addison, who was 
managing director of the Iranian consortium. 

Hicke: He was British? 

Marinovic: Yes. In fact, all these three gentlemen I mentioned were 
British. And that was quite an experience, going to those 
offices in these British firms with their commissioners in high 
uniform. And the commissioners looked like doormen with their 
miniature medals on their uniforms, from war service and so on. 



Hicke: Did anything ever come of this, the unofficial contacts, or was 
that just-- 

Marinovic: No, it was just kind of keeping track of what was going on, 
keeping in touch and trading information, basically, on the 
overall situation, on shortages, problems, labor problems, 
anything coming up in the way of new labor relations issues in 
the companies, the unions, and so on and so on. But it was 
very informal. At times, I picked up some very interesting 
information; at times, I had just a very good time chatting 
with these people, and maybe have a lovely lunch with them. 

[tape interruption] 



235 



Hicke; 



All right, back on. 



Transfer to Nev York 



Marinovic: Right. Well, every good thing comes to an end, so in the 

summer of 1963, two years after I arrived in The Hague, I was 
advised that I was being transferred back to New York. I 
saluted and I said, "Yes, sir," and off we went to New York, 
where I had been appointed assistant treasurer in charge of the 
treasurer's operation in New York. 

By then, the treasurer had moved to Arabia, so I was the 
boss man of the treasurer's operation in New York. Apart from 
the normal treasury functions, such as bank relations, bank 
account activity etc, I also had insurance under me, and the 
insured benefit plans, such as the pension plan and group life 
plan. We were also handling the employees' savings plan. But 
probably the most important function there were the relations 
with the so-called off -takers. 

Now, the off -takers were the affiliates of the four owner 
companies who were actually lifting our oil and products. 

Hicke: Such as? 

Marinovic: Such as, they kept changing names all the time, but for 

example, for Standard Oil of New Jersey, now Exxon, it was Esso 
International . 

Hicke: Oh, I see, okay. Their subsidiary companies. 

Marinovic: Their subsidiary companies that were actually buying the oil 
from Aramco and then reselling it. Now, this whole cycle of 
sales and billings and receipts was very cleverly done. 
Basically, Aramco would be selling crude and products to the 
four affiliates of the four shareholder companies. At the end 
of the month, you would make out the bill for whatever they 
bought, and send a bill to each one of them. They had 
forty- five days to pay the bill. 

So, in the middle of the following month, or the next 
following month- -I '11 give you an example: for the crude oil 
and products sold in January, we would prepare a bill and send 
it to the off -takers, and the bill would be payable March 15, 
forty- five days after the end of the month. 



236 



We had also arranged that all the government payments 
would be due in the same day, the payments of the tax and 
royalty to the Saudi Arab government. Each month, we would 
determine how much cash Aramco needed for the following thirty 
days, and whatever was left over, was paid out to the 
shareholding companies as dividends. This all occurred on that 
single day. So all this money flowed in, it all flowed out, 
and at the end of the day, we were left with enough cash to 
live for thirty days until we received the next payment of 
invoices . 

This involved a tremendous amount of coordination. There 
were huge amounts of money involved also. So mistakes were 
simply not acceptable. Every fifteenth of the month, believe 
me, was always an exercise in tension. To complicate matters, 
some of these so-called off-takers would not pay the bills in 
one single payment, but they would have several of their own 
subsidiary companies make payments into our bank accounts. 

Hicke: Directly to your accounts? 

Marinovic: Right. 

Hicke: So you were getting more than just four-- 

Marinovic: Now, what complicated matters further was, that in part the 

billings were paid in sterling also. So every fifteenth of the 
month was tension city. 

Hicke: Who paid in sterling? 

Marinovic: Pro rata, each one of them had an equal opportunity in 
proportion to their liftings of crude oil. 

This is also the first time that I was exposed to higher 
level owner representatives, because the Executive Committee of 
the board- -and later on, I'll describe a little bit more the 
functions of the Executive Committee and the board and so 
on- -but let's say the Executive Committee of the board, which 
meant one representative from each of the four shareholder 
companies would have a meeting, Executive Committee meeting. 
At that meeting, they would declare the dividends, plus take 
other actions such as approving capital expenditures, and so 
on. 

Since I was the senior finance representative in New York, 
I was the one that had to go in and explain to them, "All 
right, this is our cash situation, this is what we have, this 
is what we expect to get from our sales, this is how much we 



237 



have to pay to the Saudi government in taxes and royalties, 
this is how much we need to retain for our own operations, this 
is how much is available for dividends." And that's the only 
thing that they were really interested in. "How much are we 
going to get?" 

So at that point, I started meeting fairly high-level 
shareholder people, who were actually on our board, on Aramco's 
board, and they were invariably vice presidents or above in 
their respective companies. So I would say this was probably 
the most critical function for me. 

Hicke: Are you going to talk about the people when you talk about the 
board? 

Marinovic: Well, you know, it was a little bit a rotating thing. There 

were old stalwarts like Mr. Howard Page of Standard Oil of New 
Jersey, and George Parkhurst of Chevron, Socal as we used to 
call it in those days. There was Henry Moses of Mobil, and 
there was invariably a tough guy from Texaco. For some reason 
or other, Texaco only had tough guys. [laughs] They were 
always the real hard-nosed types, and they kept changing, but 
somehow their facade never changed. 

Anyway, this question of the basic company cash flow and 
cash available for dividends was probably my most important 
function there. What complicated matters is not only that we 
had four owner companies and four off -takers, but also that in 
forecasting how much cash Aramco would need for the following 
month- - 



Hicke: Okay, you were just talking about forecasting. 

Marinovic: Yes. What complicated this matter of forecasting was also the 
lack of correct forecast from Aramco in Arabia, from the Beirut 
office, from the AOC, The Hague, from the Tokyo off ice --each 
one of them would come in and forecast how much they thought 
they would need the following month. And we would lump all 
this together, and then we would exercise judgment, because we 
didn't believe some of these forecasts. We had to exercise 
judgment, when we felt they were either exaggerating or not 
forecasting enough; so we would have to come up with some kind 
of a reasonable number. It was an art more than a science, 
coming up with a cash forecast. 

If you underforecasted your requirements, then you would 
run out of money before you received new money the following 



238 



month. If you overforecasted your requirements, the owner 
companies would get mad because you didn't pay out enough in 
dividends. So it was a balancing act. 

Anyway, while in New York, we lived happily in Larchmount, 
which is in Westchester County, not far from New York. I was a 
typical commuter, and the children just started school in New 
York. The 1967 war happened while I was stationed in New York, 
but actually, the way things run, it happened while I was on a 
business trip in Dhahran. I managed to get on the last 
civilian plane out of Dhahran, because Cairo had already been 
bombed, and communications were interrupted. 

But somehow, I managed to scramble out on an Air France 
plane that went to Teheran and Istanbul and all over the map, 
and finally managed to make it home. Of course, Maya didn't 
have a clue where I was, because communications were 
interrupted, and she was a bit frantic. But I made it home. 



Back to Saudi Arabia in 1968 



Marinovic: All right. We come to 1968, when I was told that it's time for 
me to move to Arabia again. I said, "Yes, sir," so we packed 
up- -I must say that my wife was a little bit reluctant, 
particularly after the '67 war. So one condition she had was 
that we would not sell our house in Larchmount until we knew 
for sure [laughs], so we rented it out. 

I arrived in Arabia in September of 1968, which was very 
close to the bottom of the oil cycle. There was a glut of 
crude oil, our production was stagnating, the government was at 
the company's neck to produce more to increase the government 
revenues, the owner companies were telling us, "No, we can't 
sell it," we had reduced the workforce down to almost a 
minimum. For example, when I left Arabia in 1961, we had about 
2,500 American employees out there. We hit our bottom in '69 
with less than 800. 

Hicke: Oh, my word! 

Marinovic: And houses were being demolished, and portables were being 

hauled out of Dhahran. I think our total workforce was close 
to 10,000, including Saudis and Americans and everybody else. 
It was real belt-tightening time. 

Hicke: What was your position? 






239 



Marinovic: At that point, I was assistant treasurer, but the treasurer was 
there, so I was the number two man in Arabia. Again, I was 
involved in the normal type of functions that I described the 
first time around in Arabia, except that the local economy, say 
the merchants, contractors, banks, had developed considerably, 
so the contacts with them were much more important, and the 
dealings with them considerably more sophisticated. 

I also had quite a few dealings with the Saudi Monetary 
Agency, which by then, even though they did not call themselves 
a central bank- -in fact today they still do not call themselves 
a central bank, they're still known as the Saudi Arabia 
Monetary Agency- -had pretty much assumed the role of a central 
bank. They were printing actual money, and they were beginning 
to exercise some degree of control over the financial situation 
of the country. So I had regular contacts with them. I had 
the deputy governor, who was then my direct contact point, and 
we would discuss -- 

Hicke: Who was he? 

Marinovic: Deputy governor, oh, I don't think I remember the name now, 

because they also kept changing. And of course, I met a number 
of times the long-time governor of the monetary agency, Anwar 
Ali, who was a Pakistani who had done an outstanding job in 
salvaging the crumbling Saudi monetary structure in the early 
sixties, and obviously had the full support of King Faisal, who 
by then had taken over from the spendthrift Saud. It was 
belt- tightening time. 



The government actually managed in 
pay off all its debts, including the so- 
which was a gimmick that Aramco and the 
in the late fifties, when the government 
cash that they would in effect mortgage 
would happen is --they mostly worked with 
Morgan and Chase [Manhattan Bank] . They 
an irrevocable instruction saying, "All 
payable on such-and-such a date, you pay 
and pay so much to that bank." 



relatively few years to 
called tax assignments, 
government came up with 

was so strapped for 
their oil income. What 

two banks in New York, 

would issue to Aramco 
right, of the tax 

so much to this bank 



We would receive this letter, and on the basis of this 
letter, we would issue letters to the bank saying, "On 
such-and-such date, we will pay you so-and-so much." With these 
letters in hand, the banks would lend this money to the 
government. And these were all short-term loans, which were 
constantly rolled over. 



Hicke: 



High interest? 



240 



Marinovic: Well, I think they were getting about the prime rate, but it 
was good business for the bank, it was guaranteed, it was 
minimal work, because it was one letter, instead of having 
hundreds of loans and so on. 

In a few years after Faisal and Anwar Ali took over, they 
had paid off all their foreign debts, they had paid off 
domestic debts, and they had paid off all the tax assignments, 
so they were at that point about even, even though the oil 
production was pretty much stagnating. 



Oil Boom: Expansion of the 1970s 



Marinovic: I think it was in 1968 or 1969 that a representative of the 
owner companies, who was an Exxon man, Mr. Charlie Boyer, a 
fairly high-level individual- -not the famous Charles Boyer- -it 
sounded like it- -came out to Dhahran and gave a speech to the 
Aramco management saying how for the long-term, oil was going 
to be in oversupply, and that we shouldn't expect any increase 
in production for a number of years, and in fact, that sales 
were probably going to fall off. 

Well, about a year after that, the boom started, 
[laughter] The events of '72 and '73, the break in the 50-50, 
and the push for the price increases led by the Libyans and the 
Iranians and so on. Also, of course, the world economies had 
taken off, so demand for oil was booming, and Aramco found 
itself in the middle of an incredible boom. It started in 
roughly '71, picked up steam. At first, the concentration was 
on crude oil: get as much crude oil out of the ground and make 
it available to the U.S. companies, because they could sell 
every barrel that there was. 

That led to a massive expansion, which was an absolute 
nightmare. It was chaos, because you had to get the people in. 
We were down to 800 Americans. In order to get the people in, 
you needed housing. We didn't have housing. In order to have 
housing, you needed the people to build the housing. [laughs] 
And materials, and power, and so it wasn't just drilling wells 
and putting in more pipelines. You needed to expand the whole 
infrastructure that supported this thing. And that was the big 
difference between let's say our operation in Arabia and an oil 
company in the States, where basically all they have to do is 
drill, build plants, and so on. They don't have to worry about 
housing, transportation, water, electricity and so on. 



241 



Hicke: I'd like to interrupt with a question here: this enormous 

demand probably also made it possible for [Sheik Ahmed] Yamani 
to start- - 

Marinovic: Right. At that point, the first inkling started about 

participation. In other words, the handle of the stick was 
gradually passing from the companies to the governments. 

Hicke: But this would have been much more difficult for the Saudis if 
you had been in this oil glut situation, I would think? 

Marinovic: Of course, we went from a buyers' market to a sellers' market. 
So this gave the governments extra clout. Also, you had the 
government in Libya, you had the government in Iran, you had a 
number of other things which made the governments more 
aggressive . 



The Gas Project 



Marinovic: Now, superimposed of course on this tremendous expansion of our 
oil facilities, which involved also building a new pier in Ras 
Tanura to load the crude oil, which involved developing 
brand-new fields, which involved--! mean, the whole gamut of 
oil operations, literally billions of dollars worth of 
investment. But superimposed on that thing were two other 
enormous projects. One was the so-called gas project, and the 
other one was the electric power project. 

Now, Aramco until then was flaring most of its associated 
gas (gas produced in association with crude oil). Some of it 
was utilized as fuel, some of it was re- injected for pressure 
maintenance, but the bulk of it was flared. There simply was 
no demand. The economics of trying to capture this gas, 
treating it, building the necessary facilities, were simply not 
there. Our owner companies made a number of studies, and they 
simply said, "Look, it's just not there." 

Well, as the boom went on, demand for petroleum went up, 
and there were these enormous hydrocarbon resources just being 
burned, wasted. The Saudi government became then interested in 
utilizing somehow this tremendous resource. 

Hicke: So the move came by the government? 

Marinovic: The Saudi government. In fact, the government commissioned a 

U.S. company called, I think, Texas Eastern Gas Transmission to 



242 



make a study to design a gas gathering system and probably 
implement some of it. 

The government claimed that the gas, the associated gas, 
where Aramco was not using it, the shareholders had no claim to 
it. So they thought that they had free gas, in effect, and it 
was just a question of what you do with it. 

Hicke: Was that right under the concession agreement? 

Marinovic: You could argue back and forth. I think it was a question of 
power politics. 

At that point, we had the chairman of the board, who was 
very aggressive, extremely bright, very ambitious, fairly 
ruthless, and I could almost say something like "crafty" in 
making deals, who said, "Look, nobody else is going to get on 
this thing. Aramco is going to do it." This gentleman was Mr. 
[Frank] Jungers . He played the government against the 
shareholders, the shareholders against the government; the 
shareholders were still very reluctant to get involved in this 
thing, the government wanted to get involved in it, but they 
were dealing with this other company. 

In the end, after all was said and done, Aramco found 
itself committed to the gas program, which was I think the 
single largest industrial project in the world ever undertaken. 
The budget for the gas program was something like $16 to $18 
billion. 

Hicke: When you say Aramco was committed, do you mean that they then 
got the concession rights to the gas? 

Marinovic: No, the government just instructed Aramco to proceed. 

Now, shareholders said, "We have nothing to do with this." 
So none of their money went into the project. It was 
"government money," basically. 

Hicke: What does the quote mean? 

Marinovic: Well, it came obviously out of Aramco 's cash flow. The whole 
thing was a very interesting experiment, because Aramco was 
building this whole project, was handling it, was operating it, 
but not as Aramco, but as "Aramco on behalf of the Saudi Arab 
government." So for example, we had to keep a completely 
separate set of books. All the investments for the gas project 
were booked separately from our normal operations. 



243 



Hicke: Who owned this "Aramco operating on behalf of--" 

Marinovic: "The government." But nothing was in writing. Everything was 
somehow in the air. So we just pretended that we were 
contractors on behalf of the government, and that's how we 
built and that's how we operated this project. 

Now, the whole thing was just beyond belief. For example, 
we realized at a certain point that we'd have to bring in, 
let's say 30,000 to 40,000 foreign contractors, because there 
was simply no local workforce to handle something like this. 
So when you bring those contractors in, where do they live? 
Well, you could tell every contractor, "You bring your own 
portable housing and so on," but at that point, see, a 
contractor would come in to do a specific piece of work, he 
would bring his housing, and then when he leaves, he would just 
abandon it, and obviously we would pay for it. Then the next 
one that would come in, we would pay again for his housing. 

So Aramco undertook to build contractor camps, and we 
built huge camps in a number of locations where most of the 
construction was going on. We had over 30,000 beds in those 
camps, with dining facilities, recreational facilities, and so 
on. And so the contractors who were working on the Aramco 
project did not have to provide their own housing, and 
therefore did not include housing in their costs. 

Hicke: First you had to get a contractor to build the contractors' 
housing! 

Marinovic: Exactly. It was like a vicious circle. 

Well, then, for example, somebody came up with this 
brilliant idea for areas on both on the west coast and the 
east coast, near the shore where it was either difficult to 
build contractor housing or where the period of construction 
was going to be relatively short. What we did is we bought 
--had built- -enormous barges in Singapore. Then, on these 
barges, they installed portable cubicles, dorms, stacked six 
deep. And then we had dining facilities and so on. 

So these barges would pull up, moor along the shore at a 
strategic spot, and we had up to 1,000 contractors working and 
living in each barge. And then when the work was finished 
there, you could tow the barge somewhere else. 



Hicke: 



Brilliant idea, I guess. 



244 



Marinovic: We had people being recruited for Aramco by the thousands. We 
were scouring the countryside in the U.S. for engineers -- 
petroleum engineers, mechanical engineers, electrical 
engineers. But then we had the problem of housing them, we 
didn't have housing. So there were all kinds of priority 
lists- -who gets housing first. We built an awful lot of 
temporary barracks and sheds and all kinds of things just to 
get people in. 

Of course, we needed additional office space. We were 
building office buildings. We had material coming in at such a 
rate that nobody knew where it was or how much we had of 
anything, and it was stacked for miles in the sand. 

At the same time, the Saudi government was enjoying the 
beginning of the big boom based on their high revenues from 
oil. 

Hicke: What year are we in now? 

Marinovic: We are talking now about the mid-seventies. Mid and into late 
seventies. So they had a big boom, and they had a big 
construction program of their own, of infrastructure and 
everything else. The port facilities were so clogged that 
ships had to wait up to 150 days to off-load. 

So we came to the insanity of cement ships being 
off-loaded by air; cement would come in ships in bags instead 
of bulk, and then helicopters were lifting bags of cement out 
of cement ships and carrying them to shore! [laughing] And we 
had a constant daily fight, of course, with the numerous 
agencies of the Saudi government, who were trying to bring in 
their own requirements, over who has priority for the use of 
the ports. 

Our strong card, of course, was we would finally go to the 
minister of finance or, if need be, to the king and say, "Look, 
if we don't bring in our supplies, everything else is going to 
dry out, because this is where the money comes from to pay for 
the rest of it!" People were working incredible hours. It was 
chaotic, but it was one of these episodes that I think was 
worth living through. 

Hicke: It sounds like the frontier days, in another era. 

Marinovic: It was absolutely wild. On top of the gas program, of course, 
we had the electric program. 



245 



Hicke: Before we get into that, let me ask a couple of questions: how 
was this actually paid for? Did you transfer money from one 
set of books to the other? 

Marinovic: Right, right. 

Hicke: And what did you list that on the Aramco books as? 

Marinovic: Well, the Aramco owners were still legally stockholders, and 

they were still getting a dividend, but they were not involved 
in that part. They were involved only in the oil part. Now, 
of course, at the same time, you had a participation agreement 
being negotiated and renegotiated, which complicated matters 
further, because as of 1973, the Saudi government received a 25 
percent ownership of Aramco. As of 1974, it was 60 percent. 
As of 1978, it was 100 percent, even though there was nothing 
written, nothing was legally implemented, everything was 
temporary. So in effect, the government owned more and more of 
Aramco, and it was getting more and more of Aramco 's oil 
profits, which were absolutely insane, because you know, oil at 
that point was $36 a barrel, and so our profits were just 
absolutely staggering. 

Hicke: And that's the money that was used for the gas project? 

Marinovic: Right. But we had to sort it all out. An amusing thing is, 

speaking of participation, that Arabia became a mecca for every 
banker in the world. They were all trying to get in on the 
action, somehow to get involved, to lend, to borrow, to do 
things, and so on. There were processions of these bankers. 
And of course, they all wanted to see the Saudi government 
monetary agency, and they all wanted to see Aramco. 

Hicke: That was you. 

Marinovic: At a certain point, I spent a lot of my time just talking to 

bankers. Finally, I had to say, "All right, look. Bankers we 
deal with normally, fine. But all these other carpetbaggers--" 
I set aside an afternoon a week, and they had mass audience. 
They were very unhappy about it, but I said, "Look, we don't 
have time to do this thing." And invariably, the first 
question would be, "When are the participation agreements going 
to be signed?" And I would invariably answer, "Oh, the 
signature is imminent." 

One day, one of the bankers, it was a fellow from the 
Royal Bank of Nova Scotia, if I remember correctly, he said, 
"But Mr. Marinovic, you may not remember, I was here about a 
year ago, and you told us then that the participation, the 



246 



signature of the agreements was imminent.' 
but now they are more imminent than ever, 
was a pat answer. 



I said, "Oh, yes, 
[laughter] That 



And the amazing thing was that while we were continuing to 
operate and just pretending that everything had been signed, 
nothing had been signed. It was all just a concept, and we 
were operating under the concept, which presented our 
bookkeepers with some incredible challenges. 



Electrifying Arabia 



Marinovic: Okay, now, on top of the oil expansion and the gas program, we 
had the electricity problem. Let me tell you how this came 
about. Aramco had for its own requirements, very large, 
electric generating facilities, huge gas turbine generators, 
and we had quite an electric distribution system, power lines, 
to run all our facilities; we needed a hell of a lot of power. 
In the Eastern Province, there were two major cities, Damman 
and Khobar. Each one had its own electric power company. They 
eventually merged. And they could never keep up with the 
demand of the booming, expanding local economy. That was 
inefficient; the whole thing was a disaster, brown-outs, lack 
of electricity. The only reason I think that some heads were 
not chopped is that they always managed to keep the amir's 
palace with juice. [laughter] Never mind anybody else. 

Hicke: First things first. 

Marinovic: Then there were small towns and villages, and we figured out 
there must have been about 200 towns and villages in the 
Eastern Province, most of which had either little or no 
electricity. There were about twenty- five to thirty other 
electric power companies. Some of these electric power 
companies consisted of one small generator in a village, which 
ran two hours every evening. All right. 

So, the government became keenly aware that, as a 
prerequisite for economic expansion in the area, for 
industrialization of the area and so on, they needed a reliable 
supply of cheap electric power. And the one thing to do was to 
consolidate this whole thing and come up with a decent, large 
power company that would operate the whole Eastern Province. 

Hicke: The impetus came from the government? 






247 



Marinovic: From the government. I must say that we were also quite 

Interested in it, because fine, we could take care of our own 
requirements, but we were more and more pestered by the local 
communities to help them out, to provide them some additional 
power and so on. But there again, it was basically the 
government that said, "Do something." 

Hicke: In about what period are we? 

Marinovic: That was about 1975, roughly, it started. At that point, the 

owner companies again were very, very reluctant, even though by 
then they owned less and less of Aramco, so they had less and 
less voice in terms of mandating. They said, "It's a hornet's 
nest you're going to get into," and it was. But I think again 
Frank Jungers pulled together this thing, saying in effect, 
"We'll take care of it, we'll do it." 

He came up with a bright fellow who had made his career in 
Tapline, Trans-Arabian Pipeline Company, but had never worked 
for Aramco. He brought him to Dhahran, and he was put in 
charge of this. That was John Kelberer. He was an electrical 
engineer by background, by the way, and he collected a small 
staff of people, and I worked with him for a brief spell. Not 
on the technical side, obviously; I don't know anything about 
power. 

But one of the big problems was, okay, we're going to form 
one single company. Now that means we have to pay out the 
shareholders of the existing thirty-odd companies, get them out 
of the way. Either pay them off in cash or give them stock in 
the new company. How do you value their assets, their books 
were at best rudimentary. How do you value what these 
companies were worth? 

f* 

Marinovic: So Kelberer asked for somebody from finance to be assigned to 

help him out in that aspect. I came in fairly late, because by 
then they had economists who were making studies, and 
accountants, and auditors, and the whole thing was a total 
mess, because you simply could not establish a value for these 
little, itty bitty companies. 

So I suggested that we do something, that we just throw 
away the books of these companies, and we tell these 
people --very generous, be generous- -say, "We'll give you three 
shares of the new company for one share of your company. 
Whatever your share of your company is worth, we don't care." 



248 



"Or," I suggested, "if you think this is not generous enough, 
give them four shares. It doesn't make any real difference." 

Veil, Kelberer was quite intrigued by this suggestion, 
because he wasn't getting anywhere with this bunch of 
accountants and economists. So he said, "Well, let's try this 
thing." And that's the way it was done. 

Hicke: Instead of establishing a monetary value? 

Marinovic: Correct, they simply exchanged their shares, and they did well. 
At the same time, we avoided years of liti- -arguments- -you 
don't litigate in court in Saudi Arabia. What you do, you 
appeal to the king, and then the king appoints a commission, 
and then the commission rules. And then you object, and it 
goes back to the king. So it can go on for years, you know. 
Anyway. That was my first real contact with Kelberer. 
Finally, we set up this company called SCECO (Saudi 
Consolidated Electric Company). All of the companies involved 
turned over all of their electric assets to this company and 
received in effect stock in the company. Aramco also turned 
over all of its generating facilities, which was like 95 
percent of the total, and we set up a new company just out of 
the blue, separate from Aramco. 

At first it was staffed almost exclusively with Aramco 
people, who were "on loan" to SCECO, and some of the people 
from the existing old local power companies. This became a 
monumental endeavor also, because for example, one of the 
instructions in the royal decree that established this company 
was that we should provide electricity to every town and 
village in the Eastern Province. But nobody knew how many 
villages there were. We had to discover the villages. 

And then we would find out that villages just popped up 
out of the sand because the roaming Bedous would build a few 
shacks and they'd say, "Okay, this is a village. Now we want 
electricity." [laughs] 

As a result, we had to bring in, in addition to the 
enormous quantities of equipment and supplies for the 
requirements of the gas program and our own oil operations, all 
the requirements for SCECO. So that became a huge operation 
again. 

Hicke: The gas and electric projects were going on simultaneously? 

Marinovic: Right. Plus our big oil expansion. Now, this caused another 
little problem about money. 



249 



Hicke: Little problem? 

Marinovic: Since Aramco was basically doing all of it and spending all the 
money, we set aside another little stream of funds that we said 
was "Aramco on behalf of SCECO." Juggling this thing was a 
very interesting exercise. 

Hicke: And you needed ten or fifteen more bookkeepers, probably. 

Marinovic: I needed people. But see, I had nothing to do with the 

accounting group. I worked very closely with them but we were 
just the treasurer's group. We always stayed relatively small. 
I mean, maximum total treasurer's was something like fifty 
people, including the cashiers in the cash offices and so on. 

Hicke: That's not very much for an operation of that size. 

Marinovic: I had two men working on this cash flow forecasting, which 

means every month you had to forecast how much we needed for 
the gas program (one separate stream) , how much we needed for 
SCECO (another separate stream) , how much we needed for our own 
operation? What's going to come in? [laughs] 

And in the meantime, since- -and now we're talking about 
the late seventies- -since the U.S. shareholders by then were 
pretty much out of it and Aramco was pretty much owned by the 
government, we were piling up enormous amounts of cash. We 
couldn't spend it fast enough. Our production was 
skyrocketing, the prices were high. I think at a certain point 
the maximum we reached was close to $13 billion that we sat on 
in cash reserve. 

Hicke: Why didn't that go to the Kingdom? 

Marinovic: This is a very good question. Basically, Aramco maintained 
that, "Look, we are paying our taxes, we are paying our 
royalties, we are paying our participation payments--" like 
dividends to the government "--and we'd like to sit on the 
rest, because we'll need it down the road. If we pay it out, 
it's going to be impossible to get it back from the 
government." So we said, "We'll invest it, we'll keep it, for 
these government projects." Investing these funds became quite 
an exercise. 

Hicke: Who did that? 

Marinovic: Treasurer's. We developed, for example, guidelines: which 
banks are we going to deal with? Which kind of financial 
investments meet our investment criteria? And we were buying 



250 



certificates of deposit or buying short-term paper, treasury 
bills and so on, in the billions of dollars every month. We 
became one of the biggest traders [laughs] in short-term 
investment securities. 

And of course, the ministry of finance and the monetary 
agency were looking with a jaundiced eye on this nest egg we 
had. They wanted to get their hands on it. This became quite 
a contest between Yamani, the minister of petroleum, who wanted 
this money squirreled away by Aramco so it's available to 
Aramco for future requirements, and the minister of finance, 
that wanted to get its fist on this money. 

Hicke: Do you know who the minister of finance was? 

Marinovic: Well, at that point, the minister of finance was Mohammed Aba' 
al Khail. He's still minister of finance. And the head of the 
Monetary Agency was Mr. Qusaibi. 

I remember one day being summoned to Riyadh to go talk to 
the Monetary Agency people. I thought it was one of these 
routine problems about flow funds between Aramco and the 
agency. But when I arrived there, I was summoned to the 
governor of the agency and the deputy governor, and they sat me 
down in the governor's room, and they said, "Mr. Marinovic, 
when are you going to pay us the government money you're 
holding?" 

I said, "Well, we have paid our taxes and royalties on 
time, our participation payments. Of course, we have some cash 
reserves, which we need for our capital investments on behalf 
of the government." Mr. Qusaibi spoke excellent English. He 
said, "Mr. Marinovic, let's not fool around. We know how much 
money you're sitting on. When are you going to pay this money 
to the government?" 

I said, "Well, if you are talking about the funds we've 
reserved for future investments, this becomes a political 
question, and I think your minister should talk to my minister. 
I don't think that I can answer this question here." 

After a while again, "Mr. Marinovic, do you know that it's 
a crime to hold government money?" [laughs] I was beginning 
to get a little bit sweaty; I thought I'd never make it back 
from Riyadh, that I was going to wind up in the dungeons. I 
kept just saying, "Well, I think that this is a subject that 
your minister should raise with His Excellency Sheik Ahmed Zaki 
Yamani, because we are acting upon his instructions, and I 
cannot depart from his instructions." 



251 



This went on back and forth. Veil, they Bade a number of 
attempts, but while I was there, we resisted every attempt. Of 
course, gradually as these programs took off and increased, and 
ore and aore money was being spent, we whittled down some of 
the cash hoard. But when I left in '85, we still had I think 
$8 to $10 billion in cash reserves. 

Hicke: And were the gas and oil projects finished by that tine? 
Marinovic: Yes. But something could have come up. 
Hicke: Something will come up. 

Marinovic: Down the pike. [laughs] And you see, this was one of the 

strengths of Yamani . Because Yamani in effect never had to go 
to the council of ministers or the king for money for his 
projects, for the oil projects. He didn't cost anything to the 
government. Every other minister had to go cap in hand and 
plead for allocations, for budget increases. He didn't. He 
had it right there stashed away with Aramco. 

Hicke: But what caused his problem in the long run? 

Marinovic: I think what caused his problem in the long run is that he 
managed to alienate quite a number of high-level officials, 
including some royal family officials. And also, he became 
such a by-word in the world- -when you talked about Saudi 
Arabia, you didn't talk about the king, you talked about 
Yamani. And at a certain point, I think that the royal family 
just simply decided he was getting too big for his britches. It 
wasn't any dramatic incident or anything, it was simply at a 
certain point, they decided he just had to go. Also, I think 
by then they felt that the oil picture was in pretty good 
shape, so-- 

Hicke: Somebody else could handle it. 

Yes. 
Hicke: Veil, that's absolutely fascinating. 



Marinovic: 



Saudi Arabia on the Past Track 



Marinovic: Anyway, I mentioned before that just before 1970, we had come 
down to about 10,000 employees, of which fewer than 800 were 
U.S. employees. By the late seventies, our total workforce had 






252 



Hicke: 
Marinovic: 
Hicke : 
Marinovic: 



gone from 10,000 to 60,000. Our U.S. workforce had gone from 
800 to 5,500. Of course, locally this caused also an 
incredible prosperity for the Saudi contractors and Saudi 
merchants, because they had an absolute advantage in terms of 
getting work. 

Almost every foreign company had to obtain a local partner 
to do business in Saudi Arabia. Some of these local partners 
were very helpful; some of them simply got their 5 percent or 
10 percent without doing a thing. And we're talking about very 
large amounts of money. So prosperity hit Saudi Arabia with 
all its benefits and drawbacks. 

The government did all it could to spread the wealth. I 
mean, they started building schools and universities like you 
wouldn't believe. Hospitals were being built all over the 
country. Of course, Saudi Arabia had free education through 
university, and even post-graduate work was subsidized. Not 
only you didn't pay tuition, you got a stipend to attend 
school. You have free medical care, heavily subsidized 
utilities, gas, everything else. For a long time, the 
government also heavily subsidized staples, like flour, oil, 
sugar, and so on. The government is even subsidizing people 
getting married, they give them marriage loans. 

Only Saudis could own real estate in Saudi Arabia, so 
during the big boom, of course, there was also a tremendous 
real estate boom, and Saudis made fortune on real estate. I 
mean, it was wilder than anything that had ever happened in 
Texas in terms of the real estate boom. 

Who owned the real estate to sell? 

The government, the royal family and individual Saudis. 

The house of Saud, the royal family? 

The royal family of course owned a lot of it. But there were 
enough individual Saudis who bought and sold and traded land 
and made fortunes in the process. 

But since everybody else was making money, the average 
Saudi wasn't too concerned about some individuals making 
fortunes. Everybody else was so much better off than they were 
before. Also, being a Saudi became a thingthe Saudis were 
the elite. "Saudis only." A little bit like in the old Roman 
empire, "I am a Roman citizen." "I am a Saudi, step back, 
everybody." Which also was very satisfying for the psyche of 
the group. 



253 



That boom was something incredible. Roads were being 
built, bridges, ports, hospitals, oil facilities, gas 
facilities--! mean, bulldozers were going twenty-four hours a 
day, cement mixers. Every big construction company in the 
world was there: Bechtel, Fluor, you name it, they were there. 
And they all had to work with local partners, of course, which 
made the local partners very rich. 

Hicke: The house of Saud also had plenty of money, didn't they? They 
were probably-- 

Marinovic: They made fortunes also. 

Hicke: Plus they owned all the real estate, or a good part of it. 

Marinovic: And a lot of the princes became very active businessmen. They 
got into all kinds of businesses. And of course, they enjoyed 
priority, and so they became very successful businesses. 

At the same time, since Saudi Arabia's population was 
rather limited, during this period they brought in I would say 
close to two million foreigners, workers: Pakistanis, Indians, 
Filipinos, Bangladeshis, Sri Lankans . Also, a lot of 
Westerners in supervisory and technical positions. By and 
large, I was disappointed the way the some of the Saudis 
treated these people. They exploited them. 



254 



Hicke: That's too bad, because they didn't get that kind of treatment 
from Aramco, did they? 

Marinovic: So these were kind of the negatives. Okay-- 
[tape interruption] 



255 



III ASSISTANT TO THE CHAIRMAN OF THE BOARD 



Appointment 



Hicke: Okay, we're just going to get back to your own career. 

Marinovic: Well, in 1978, in the middle of all this commotion and the boom 
and everything else happening, I was suddenly advised 
that- -well, the way it was put to me by Mr. Jungers , he called 
me in one day and he said, "Do you have somebody ready to take 
over your position as treasurer?" I'd had a few run-ins with 
Mr. Jungers before, so I didn't know exactly what was going on. 
I said, "Yes, I have Chuck Sawaya, who is technically as 
competent as I am. Maybe he needs a little bit of broadening, 
but in terms of technical expertise, he is absolutely tops. He 
is ready to take over." 

Jungers said, "How soon can you get him into the job?" I 
said, "Well, he is right now in Houston, so it will take me a 
while to get somebody to take his job in Houston, and bring him 
out. At least a few months." He said, "Go ahead and do it." 

I said, "By the way, may I ask, what are the plans for 
me?" He said, "Oh, yeah. Well, we have to set up a new 
position that doesn't exist now, and kind of put together some 
of these things that are now scattered. We'll talk some more 
about it, but get going on this thing, getting Chuck." So I 
said, "Fine." I had no idea what he was talking about. 

Eventually I had a chance to talk to him a couple of 
times, and basically what was missing, Aramco had grown so 
much, what was missing was somebody to keep track of and 
supervise a number of functions which in some of the large 
companies are handled by the secretary of the corporation. In 
addition to that, we had owner company board members, we had 
owner company Excom [Executive Committee] members, we had 
government board members, we had government Excom members. 
They were all getting information from Aramco in a haphazard 



256 



way. Somebody would get something that somebody else didn't 
get, and it would cause all kinds of problems. I think we were 
like six months behind in writing minutes of Excom meetings. 

The salary committee material was in a woeful state in 
terms of tracking of who's coming up for promotion, who is 
coming up for a merit increase; it was disorganized. Because 
Aramco had grown so fast over those years , and the priority 
was, get the oil out, forget everything else. 

So the time had come when something had to be done, and 
apparently there had been a study by the four U.S. companies 
about the Aramco organization. They came up with a strong 
suggestion that somebody be set up to handle and coordinate 
these activities. 

The first idea of Jungers was to call me secretary of the 
company. However, Mr. Johnston, Joe Johnston, who was in New 
York, and who had been secretary of the company for ages, and 
who had the full confidence of the U.S. owner companies, was in 
no mood to retire. So at that point, Jungers said, "Well, 
fine. We'll just call you something else, but you basically 
will do that work." So somebody dreamt up this title, Atcob, 
assistant to the chairman of the board. 

This meant that I reported only to the CEO and chairman of 
the board. I was completely independent of any other senior 
executive in Aramco. Gradually, we built up my functions. One 
of the activities I supervised was the so-called Organization 
and Industrial Engineering Department. Its main responsibility 
was drawing up and implementing top-level organization charts 
for Aramco to respond to the constantly changing circumstances 
and requirements. When a company's expanding at that rate, you 
constantly have to reshuffle and reorganize and see how to keep 
control of the whole operation. It was running wild. In 
addition to that, they made the typical industrial engineering 
studies: efficiency, manning levels, and so on. Anyway, this 
was one department . 



Management Development Department 



Marinovic: The second function that was put under me was our Management 

Development Department. The Management Development Department 
was charged with the responsibility of running herd on the 
so-called management replacement tables. We had a system in 
Aramco that for every management position down to division 



257 



Hicke : 
Marinovic : 



level, which was pretty low, you had to have an annual plan, 
which was reviewed and approved, which showed the incumbent, 
which showed the potential replacements, how far away they were 
from being able to take over- -ready now or ready within a year, 
ready within three yearswhat they needed in the way of 
development to be able to handle the job, such as rotational 
assignments, educational assignments, and so on. 

So for every job- -now, we were not that much interested in 
the lower levels, but let's say when you talk about department 
heads, general managers, vice presidents, there was a great 
deal of interest and a lot of time was being spent on that. 
The Management Development Department was charged with tracking 
and handling this whole operation. Obviously, it was a very 
delicate and very confidential type of thing, particularly when 
you talked about senior positions. The only people we did not 
do replacement tables for were the chairman and the president. 
We felt that this was in the owners' hands and outside of the 
our scope. But even for senior vice presidents, we had these 
replacement tables. 

What was complicating matters at that point, of course, 
was an intense Saudization drive. So you had to particularly 
single out the Saudi candidates for all these various jobs. As 
the Saudi candidates became more viable, and some of them 
started moving into the management jobs, Yamani requested that 
we develop a special chart which we internally- -within the 
Management Development Department- -called the "greening of 
Aramco" chart. 

What it is, we had on this chart all executive positions, 
general manager and above. The box where a Saudi was incumbent 
was colored green. Then the box where we had a Saudi candidate 
whom we estimated to be ready within two years, we'd stripe the 
box green. [laughs] And then, for positions where we had 
potential Saudi candidates but we had not quite decided how far 
along they were, the box was rimmed green. 

Now, this is something that the manager of this department 
and myself did by hand. I mean, the secretary would prepare 
the chart with the boxes blank, but then the actual names and 
the greening, the two of us- -Neville Robinson who was the 
department manager and myself --did by hand. This was reviewed 
only by the chairman. 

Did you keep it locked in the safe or something? 
Oh, yes, a double safe, this was. It was dynamite. 



258 



And then, the chairman would go to Riyadh and review it 
with Yamani. Then return- -he didn't give him a copy, but bring 
the same original back and hand it back to me [laughing] . 

Hicke: What were Yamani 's reactions? 

Marinovic: Yamani was very much interested in pushing Saudis, but he was 

also very concerned about keeping a strong American presence to 
maintain Aramco as the kind of organization that he liked it to 
be. 

Hicke: The quality of-- 

Marinovic: Management, and so on. We had some other Saudi members of our 
board who were much more aggressive- - 

Hicke: In Saudization? 

Marinovic: --who were pushing this, "Why don't you move so and so"-- you 
know, and so on. Anyway the Management Development Department 
basically was responsible for the management replacement 
tables, and this consisted of a whole series of reviews 
with you started at the department level, and then you went to 
the vice president, then on to the senior vice president, until 
the whole book was reviewed and approved. The "greening of 
Aramco" was a separate exercise. [laughs] 

Hicke: But time consuming, I would think. 

Marinovic: Yes. It took a lot of thinking also. And it's obviously a 

very dynamic thing, because you can make your plans today, and 
then something happens tomorrow and a chain reaction goes 
through the whole organization. But it was fascinating also in 
many ways . 

Also, they were in charge, this Management Development 
group , of- - 

f* 

Marinovic: They were in charge of soliciting candidates and selecting 
candidates for advanced management programs . We would send 
selected individuals to Harvard for a three -month program, to 
Columbia, to Stanford, to a number of universities in the U.S. 
We had to decide at what stage in somebody's career he would 
benefit most from such a general, broad educational assignment. 
These were not technical assignments, these are just general 
management type of programs . 



259 



Plus, we developed a number of in-house middle management 
programs where we brought in outside speakers and instructors, 
and we would have this in-house for middle level managers. 



Internal Services Group 



Marinovic: The third activity, which was the one that gave me I think more 
trouble than anything else, was our so-called Internal Services 
Group, which was basically our anti-fraud, conflict of 
interest, embezzlement, whatnot group. We called them our 
gumshoes, and they consisted mostly of former FBI or Scotland 
Yard types. Dealing with them was a very interesting 
experience, because they were always gung-ho to get the 
criminals, of course. If you didn't go along at times with 
their over enthusiastic recommendations, then you were "soft on 
crime . " 

So my role was sifting through their findings and 
suspicions and saying, "Now, wait a minute. Just wait. Now 
let's see what you have." [laughs] "And let's see if we can 
proceed or not." Because of this boom, we had a hell of a lot 
of new people, not career Aramco people, who might be tempted 
to get a kick-back from a contractor, and we've had a number of 
such cases. This group was looking into these kinds of 
activities. And they were reporting to me. Then if I decided 
that the thing had real merit, I would approach either the 
executive in charge of the individual or, if it was more 
serious, I would go to the chairman. Otherwise I would have 
been in the chairman's office all day, bringing such cases in. 

Hicke: You had to sit as a minor court? 

Marinovic: And it was kind of interesting. At a certain point, we set up 
something called the Conflict of Interest Committee, which 
included the senior vice presidents and the chairman, and I was 
the secretary. The chairman told me, "Look. We've set up this 
committee to adjudicate these conflict of interest cases. Now, 
your performance rating will be influenced by how few cases you 
bring the committee, and how many cases you solve yourself. We 
have other problems." [laughter] 

There were an awful lot of these awkward but marginal type 
of things. You know, contractors would give gifts to our 
employees. Some were blatant about it, but a lot of cases were 
kind of marginal. You also had to understand a little bit the 
Saudi custom of gift giving and so on. 



260 



I had to rule on these things , and people would call me 
saying, "Look, I have been offered this and that, what do I 
do?" After a while, I developed a fairly simple system. I'd 
say, "Okay, just keep it, fine, no problem." Or I would say, 
"No, you have to return it. Just write the guy a nice letter 
and tell him that you appreciate very much, and you're sure of 
his good intentions, but unfortunately the company policy 
forbids you from accepting". 

One day, one of the vice presidents asked me, "How do you 
make an on-the-spur decision like this?" I said, "It's very 
simple. Anything that I would like to have or keep, it's a 
no-no." [laughter] 

I remember one day a contractor gave to a number of 
employees he was dealing with beautiful Japanese binoculars, 
with lovely leather cases. One of them brought me one and 
showed it to me. I said, "Give it back. I would love to have 
this thing." [laughter] 



Executive Comcensation 



Marinovic: All right. Now, the fourth area that I was responsible for was 
executive compensation. I had a couple of people who worked 
for me on this thing. We handled the salary administration of 
all of our department -heads -and- above employees, which meant 
about 150 people. This involved late in each fall asking all 
the senior vice presidents to come up with a ranking of their 
employees, in terms of their performance. Category one, 
category two, and so on. Of course, every senior vice 
president wanted all his employees to be category one, and we 
tried to explain to them that they have to meet the bell curve 
distribution. There was a lot of wrangling back and forth. 

Once we had what looked like a reasonable bell curve- -we 
never achieved a true bell curve, but it was reasonable- -then 
the whole thing was submitted to the chairman and then he would 
sign off on it. 

Then on the basis of the performance category of the 
individuals, their salary plans for the following year were 
developed. In other words, okay, this individual category is a 
one performer, he's eligible for a merit increase in twelve to 
fourteen months, and this year the percentage is 8 to 12 
percent. The senior vice presidents would submit plans for 



261 



employees reporting to them. We would again sift through this 
and go back and talk to them and argue with them and say, 
"Look, this doesn't look realistic, you can't give this fellow 
maximum increase in the minimum time every year unless he walks 
on water, and I haven't seen him walking on water." 

At the end of the process, the chairman signed off on the 
overall plan. Then this was submitted to the salary committee 
of the board, which consisted essentially of the same 
individuals who were members of the Executive Committee. 
Basically with few exceptions they accepted the plan. 

And then, the following year, you just followed this plan. 
It was our responsibility to tell a senior vice president, "All 
right, now according to our plans, on April 1, Joe Blow is 
supposed to get a 10 percent merit increase. Is this still 
what you want to do?" and so on. And if he said, "Yes," we 
would do the paperwork and implement the salary action. 

Apart from the regular salary administration that I just 
described, we had something called the incentive compensation 
award, which was a bonus plan limited to the higher level 
employees. It was an annual bonus based on performance. When 
the plan started in the mid to late sixties, the award 
consisted of U.S. company shareholder stock. You would be 
given stock in the U.S. companies. Some of the stock was 
immediately available, some of the stock was held in escrow for 
several years. 

Then, in the mid to late seventies, with the U.S. 
shareholders being more and more out of the picture, we turned 
this into simple cash awards. But there again, the payment of 
the award was staggered over several years. My responsibility 
was working with the senior vice presidents, getting their 
proposals together, matching them against what we thought was 
reasonable, and then sitting down with the chairman and the 
president, the three of us, and going down the list individual 
by individual saying, "All right, this fellow has been 
recommended for $20,000; no, that's too much for him; $15,000." 

And then, this final approved list was submitted to the 
salary committee for approval. 

We tried to keep our U.S. payroll individuals at parity 
with the U.S. oil companies in terms of total compensation. So 
every two years, we would have meetings with a shareholder 
compensation expert to find out about their salary structures 
and levels. We would try to kind of strike something in the 
middle between the four companies. Invariably, Exxon was 



262 



paying most and Texaco least. We would be somewhere in the 
middle . 

At a certain point we found out that the shareholders were 
not only giving cash bonuses, but they were also giving stock 
options to their senior employees. Now, there was no stock in 
Aramco we could give as stock options. So to supplement our 
cash bonus plan, we devised something called Special 
Compensation Award Plan, which was also in cash. It was 
restricted to an even higher, smaller group of individuals. The 
receipt of the funds was staggered over a number of years. So 
we had the basic salary and then we had two different bonus 
plans , and that was all handled and coordinated through my 
group . 



Executive and Salarv Committees 



Marinovic: Another responsibility I had, and it was probably the most 

important, was to act as the funnel through which everything 
going to the board of directors, to the Salary Committee, to 
the Executive Committee, to the government directors, went. So 
at all times, somebody knew what went to whom when, and we had 
a record. 

Now let me just open a brief parenthesis here to tell you 
about the board, the Excom and the Salary Committee. The board 
originally consisted solely of U.S. shareholder people. 
Gradually we started getting some of our Aramco people on the 
board who were not shareholders. I think in '61, or there 
abouts, the first government members joined the board. 
Eventually, when I left, we had- -oh, let's say in the early 
eightieswe had eighteen to twenty board members. We had two 
from every shareholder company. We had four or five from 
Aramco. We had five from the government. 

Now the board met twice a year, and these were basically 
ceremonial occasions. The board in the fall approved the 
capital program for the next three years, approved a number of 
specific capital expenditures, and listened to presentations of 
various types. But essentially, the real decision-making was 
made at the Executive Committee level. 

The Executive Committee members were also board members, 
you know. Basically for the board meetings, they would bring 
extra bodies along. It was very ceremonial and very official 
and all that. But it meant that, for example, I had to prepare 



263 



eighteen books with all the board material for all the board 
members, and get it to them in time so they would not complain 
that they're are prepared, and trying to pry the information 
loose from the people who were preparing it who are saying, "I 
don't have the figures, it's not ready, I can't get it." That 
was very interesting. 

Hicke: I don't know if interesting is quite the right word! 

Marinovic: The Executive Committee met in the months that the board didn't 
meet. Occasionally, they skipped a month or so. So you had, 
let's say, eight Executive Committee meetings a year and two 
board meetings. The Executive Committee had all the powers of 
the board, and that's where the real business was done. In the 
Executive Committee, each session would look at the cash 
situation and cash flow, declare dividends, specifically 
approve specific capital expenditure requests. You see, the 
capital plan was approved by the board, but then for every 
project, you had to come and actually ask for the money. It's 
the difference between appropriation and expenditure. 

So you had to have a project proposal for each capital 
item going to the Executive Committee. And of course, during 
the boom, we would have forty, fifty of these each month, this 
one for $400 million, this one for $70 million. I would also 
sit in at the board meetings and the Executive Committee 
meetings, even though I didn't have an official function. I 
would sit there to be sure that everybody was taken care of 
with everything, and also to hear what was going on for my own 
guidance for further action and follow-up. 

As I mentioned, we also had a Salary Committee. There 
again, I was responsible to get all the required information, 
and that was pretty sensitive stuff, with the bonus plan and so 
on, so I had to use extra precautions in getting this to the 
various board Salary Committee members. After the meetings I 
would implement whatever was approved, dishing out all that 
money and so on. 

Part of this running herd on the board and the Executive 
Committee and the Salary Committee was making arrangements for 
all the meetings. Traditionally the board met in the fall in 
Dhahran and in the spring somewhere in the U.S. San 
Francisco- -you know, they tried to rotate it among the home 
offices of the four shareholders- -San Francisco, New York, 
Houston- -once we established our subsidiary in Houston, we 
decided it might be a good idea to have a board meeting in 
Houston. 



264 



When we had a spring board meeting outside of the country, 
it was a logistical nightmare, because you had to make all the 
arrangements for accommodations, transportation, social 
activities. For example, Aramco had a wonderful custom that 
every time they had a board meeting in the U.S., the board 
would invite for a dinner and overnight stay the retired Aramco 
executives from the area. We would have fifty, sixty people 
with their wives, take care of them, make all the arrangements. 

Then when Yamani came to a board meeting, that was a 
nightmare. Because Yamani, after he was kidnapped and almost 
killed by the terrorists, was extremely careful. He had a 
group of bodyguards. They were all British former SAS fellows, 
you know, the Special Air Services, which is the ultra -commando 
type unit that the British use for anti- terrorism activities. 
He had about six or eight of them, and they traveled with him 
wherever he went. 

Of course, every time they came to the States, somebody 
had to get from the State Department special approval for these 
people to bring in all their equipment- - 

Hicke: Machine guns and-- 

Marinovic: And of course, then you had to coordinate with the police at 
the airport, and the airport officials, before he arrived in 
his jet. It was quite an operation. 

I'll never forget one board meeting in San Francisco at 
the St. Francis Hotel. We had the end of a corridor for Yamani 
and his group. He always traveled with all kinds of 
hangers-on, so of course, you took care of the whole group, and 
his bodyguards. His bodyguards had a room, kind of the first 
room in this cul-de-sac. They put a table in the corridor to 
block the corridor. They were in there in the room, and I went 
down to see them to coordinate the next day's activities. They 
were all there, had all taken out all their equipment, guns all 
over the place. And at a certain point, there was a knock on 
the door. They said, "Yes, who is it?" "Room service." They 
had ordered something. And in comes this very distinguished, 
white-haired black gentleman rolling this big room service cart 
before him. And all of a sudden, all you see was the whites of 
his eyes! [laughing] All this hand artillery around the room. 

Hicke: Here's World War III, beginning right here! 

Marinovic: Anyway, so this had all to be coordinated. I remember once 
there was a special meeting in Panama City when Yamani and 
shareholder representatives were trying to nail down the final 



265 



terms of government ownership of Aramco. One of the members of 
his Yamani's posse was a Lord Patrick Beresford-if I remember 
the name correctly- , who had fallen on hard times and was a 
bodyguard for Yamani. Apparently, he had just received a 
brand-new gadget, some sort of sawed-off shotgun or something, 
and he was in his hotel room fiddling around with this, and all 
of a sudden the thing let go! The blast went through the 
window- -it demolished a car parked in front of the hotel! 
[laughter] 

Hicke: Oh, he was lucky there was nobody in the car, I guess. 
Marinovic: But he ceased to be a bodyguard immediately. 

And then, we had to ask Yamani, "All right, you're coming 
to the board meeting?" "Yes, yes, definitely, I'm coming," 
which didn't mean anything. "Who is coming with you?" Well, 
his family- -"Yes , my family." Maybe, maybe not. And then he 
had some friends, and then his doctor, and some others who just 
happened to be around. And you have to make arrangements for 
all these people, accommodations and limousines and cars. It 
was a really glorified travel agent functions. 

Fortunately, I had one young lady that worked for me, and 
she was absolutely a genius at this. I would have never been 
able to handle this without her. She had it on the computer, 
and I think hourly she was revising all these travel plans for 
everybody. 

By then, Aramco had six executive jets, and it was always 
a last-minute decision who would go in which jet, and where, 
and when. We had one Saudi board member, a deputy minister of 
petroleum (he was also a Executive Committee member, Salary 
Committee member) , who was a real pain because he decided to 
take advantage of the whole thing. So he would be going, he 
had a vacation place in Pennsylvania, and he would decide to go 
on vacation. He would simply commandeer one of our G3s, 
Gulf streams, and for a month, you wouldn't see the plane. He 
was gone with the plane, tooling around the U.S. 

Aramco was picking up the tab for all of this, hotels, 
limousines, you name it. I was just getting these bills. They 
were streaming in. One day, I confronted this same gentleman. 
I told him, "Look. You know, you went to the Excom meeting in 
New York, and I know that's very hard work, you're a very 
conscientious individual, I'm sure it must have been very 
tiring and so on, so obviously you couldn't hop on the plane 
the same day and take off. You had to spend another day or two 
in New York. But then from New York to Dhahran it's a long 



266 



way, it was reasonable to break the trip, and stop for a day or 
so in London. " 

But I said, "But these twelve days in London at the London 
Hilton with a limousine twenty-four hours a day, I'm having a 
little bit of a problem with this." He almost took my head 
off. And I remember I went to our chairman and I said, "Look, 
this is getting out of hand, this whole thing." He said, "Tell 
him no!" [laughter] 

Hicke: Oh, sure. [laughter] 

Marinovic: Anyway. Oh, 1 have to tell you one little story. One year we 
had our board meeting at the Helmsley Plaza in New York. At 
that point, the two presidential suites were taken, one for 
Yamani and his retinue, plus all the rooms next to it, and the 
other one for our chairman, Kelberer. And then we had I don't 
know how many suites and rooms and so on. The whole thing 
lasted three days, but lot of preparations had to be made 
before. I even went to New York ahead of the meeting to check 
things out. 

After the meeting I came back to Dhahran, and we got the 
bill from the Helmsley, and it was $280,000 for three days. 
Which, you know, was not all that outrageous considering the 
number of suites and rooms we had. So I sat down and I 
dictated a letter, a two-page letter, to Leona Helmsley. You 
remember all the newspaper ads how she was running personally 
the hotel, checking the closets etc. - -remember those newspaper 
ads? So I wrote her a letter and I said, "We've had our board 
meeting at the Helmsley Plaza and I'm quite pleased. But I 
thought you might want to get some playback, some comments. 
We've been having these board meetings at such places as the 
St. Francis in San Francisco, and Inn on the Park in London, 
and so you might be interested in some comments." 

And I listed a lot of things that were very good. I 
thought that the suites were lovely and the telephone service 
was excellent. And then there were certain problems, and I 
listed some of these problems. And by the way, I mentioned at 
the beginning, "Since we spent $280,000, I thought you might be 
interested. " 

And I really took pains to put together a very nice 
letter; there were a lot of praises, but also some negative 
comments and criticism. I never received a word of an answer. 
Leona Helmsley! When they jailed her, I was delighted, 
personally. 



267 



Hicke: But she was too busy checking the closets to reply to a 
$280,000 customer! [laughter] 

Marinovic: Right. Anyway, I've kind of covered the areas of my activity. 
There was one other area, and that was basically doing whatever 
the chairman couldn't find anybody else or didn't want anybody 
else to do. All kinds of miscellaneous things. Some of them 
were minor things, some of them were very delicate things, some 
of them involved people, personalities. So I was his kind of 
gofer on all kinds of things that were not spelled out in my 
job description but obviously I was responsive to his needs. 



John Kelberer is Appointed Chairman 



Marinovic: As I mentioned before, the fellow who put me in this position 

was Frank Jungers, and I've never been able to find out whether 
he personally picked me or whether somebody on the Board said, 
"Put Marinovic in this job." That's still a mystery, as far as 
I'm concerned, because as I've said, I've had a couple of 
run-ins before with him, and I thought that there was no 
particular love lost between the two of us. 

Well, a few months later, what happens? All of a sudden 
Jungers is gone. Very suddenly. At that point, John Kelberer, 
who in the meantime had done this SCECO thing and rotated 
through a number of senior positions and obviously was a superb 
executive, was picked as the new chairman and chief executive 
officer. They brought in a fellow from Exxon by the name of 
Hugh Goerner. 

The fact that they brought in an outsider as president, 
was a real no-no as far as Aramco is concerned. They made 
Brock Powers, who was president under Jungers, they made him 
vice chairman of the board. 

Hicke: Was that a new position? 

Marinovic: Which didn't exist, and which was kind of meaningless. It was 
a very bad time for Brock, who is a wonderful and highly 
competent individual, I have very high regard for him. But 
unfortunately, I think what happened, he was associated very 
closely with Jungers, so--. Once Jungers was removed, I guess 
they felt that they also had to do something about Brock 
Powers. He lingered on as vice chairman for a while, and then 
he quit. 



268 



Hicke: 
Marinovic: 



So we had a new set-up, 
interruption] 

Hugh Goerner was the-- 



We had Kelberer, and-- [tape 



Hugh Goerner was the president, brought in from Exxon. So the 
new two people at the top were Kelberer as chairman of the 
board and chief executive officer, and Goerner as president. 
And even though in theory everybody reported to both of them, 
they kind of split up the activities. Goerner was running 
operations. Kelberer was concentrating on government 
relations, finance law, planning, staff type of activities. 
Now of course, every-- 



Hicke: You were just talking about how the division of 
responsibilities between the president-- 

Marinovic: Right. And everybody reported ultimately to the chairman. Oh, 
as I mentioned, shortly after I came to the new position, 
Jungers left the company and Kelberer became chairman. For me 
it was a bit awkward and at times amusing, because Kelberer 
didn't have clear ideas about what I was doing, or what I was 
supposed to do, and I didn't know him all that well. As I 
mentioned before, I'd worked with him for a brief spell on 
SCECO. So it took a little bit of a get-acquainted period, a 
couple of weeks until we sorted things out. 

I remember one specific episode: at a certain point, he 
was going to discuss with the president some high-level salary 
actions. So he said, "Baldo, you know, would you mind leaving? 
I have to discuss certain salary actions with Hugh." I said, 
"John, I prepared these salary recommendations." [laughter] 
"Oh," he said, "you handled it?" I said, "Yes, I'm handling 
this . " 

Anyway, Kelberer was the opposite of Jungers. I would say 
they're two completely different types. He was brilliant 
himself, very quiet, very subdued, very low-key. He had a 
favorite trick when during a discussion people started arguing, 
and things got heated. The more heated things got, the more he 
lowered his voice. At a certain point, there was this absolute 
silence, everybody was straining to try to hear what John was 
saying. [laughs] He had a marvelous way of controlling a 
meeting like this. 

He was much stronger than Jungers on human relations, and 
at the same time, he had an incredible memory. Even though he 



269 



had not worked in Aramco, had not come up through the Aramco 
ranks, and therefore he had not served in various low-level 
positions all over Arabia, he still knew every plant, he knew 
every facility, he could discuss in detail any capital spending 
proposal, he knew what was behind it. And besides, he was an 
absolutely delightful person. So I think my fondest memories 
from Arabia are really of working with John Kelberer. 

I'll tell you one little story: one day--I loved fishing. 
That was my favorite recreation in Arabia. I had a boat and I 
used to go out fishing in the Gulf. And one day, it was two 
days after the mosque in Mecca had been seized by those 
fanatics. Well, a whole bunch of us decided to go pretty far 
out fishing, about five boats. 

We were out there in the middle of the Persian Gulf, when 
all of a sudden the coast guard, Saudi coast guard boat came. 
We'd had problems with them before, because they didn't like us 
around. So the boat came, and I produced my Aramco I.D. card 
and my sailing permit, and started chatting up in Arabic with 
the guy who appeared to be in charge. He looked very grim, and 
he just took my papers and he said, "Ruwh Qurrayah" which meant 
"go to Qurrayah." That means "Go to Karea." That was the 
nearest coast guard station on an isolated patch of sand in the 
middle of nowhere. 

Well, I started arguing with him, and the fellow who was i 
with me in the boat, our senior vice president of finance, 
Frank Milne, nudged me and he said, "Baldo, look at the fellow 
behind him." And behind the fellow who was talking to me, 
there was another guy who had a machine gun pointed at me. I 
said, "Yes, I'm going to Qurrayah right now." 

So they collected all these boats, and we sat under arrest 
by the coast guard there the whole day. That was a Friday and 
on that afternoon at two o'clock I was supposed to meet with 
Kelberer and Hugh Goerner to discuss the bonus plan awards. 
Well, it was obvious to me that I would miss the meeting, 
[laughter] However, I did manage to get through by telephone 
to a nearby Aramco outpost, and I asked them to call somebody 
to call somebody else and to relay a message to Kelberer that I 
was in jail, that I could not make it. 

Eventually in the evening they let us out. So the next 
day I came to work, and Kelberer returned to me the bonus 
recommendations. There was an amount for me, and he had struck 
it off and just written next to it, "Gone fishing." [laughter) 



270 



Hicke: That's terrific. 

Marinovic: By the way, there was a little episode during this coast guard 
adventure that will illustrate a side of the Saudi mentality. 
On one boat was a friend of mine who couldn't find anybody else 
to go out with him, so he kind of conned his wife to go out 
with him, even though she didn't particularly like to go out on 
the boat. Well, they were also picked up, and they were 
brought to the coast guard station and all of a sudden, a big 
discussion ensued among our Saudi coast guard captors. 

We finally figured out what was going on. There is an 
absolute rule that no women are ever allowed inside any 
military installation. So they couldn't take her in. On the 
other side, she was a captive, so they couldn't let her go. So 
they had a problem. 

Finally, you know what the solution was? They brought him 
into the compound, and they left her to sit in the sand outside 
the barbed wire. She sat there for six hours, but her husband 
was allowed to bring her water through the barbed wire. I can 
assure you, that she never went out again on the boat! 

Hicke: I was just going to say, she probably regretted that decision. 

Marinovic: Anyway, Kelberer was an absolutely delightful individual, and 
very quickly he and Yamani developed a strong rapport. After 
the change of ministerial guard, surprisingly he developed an 
extremely good rapport also with Hisham Nazer. His last year 
or so, year and a half, he spent most of his time shaping the 
final structure of Aramco as a government corporation. Because 
until then, when I left in '85, Aramco as a legal entity was 
still a Delaware corporation of which the four U.S. companies 
owned all the stock, but Aramco 's assets were owned by the 
government. So it was very confusing for everybody. 

Kelberer worked a lot with the U.S. companies and with the 
minister to effect the change and finally, there was a royal 
decree organizing this Saudi company called Saudi Aramco. The 
new relationships were established and so on. That was his 
last major achievement. And then he finally retired, came here 
to Austin, and within less than a year, he developed cancer of 
the pancreas and died within nine months. Tragic. 

I spent a lot of time with him during his last year. I 
used to take him to his chemotherapy sessions. The guy was 
serene, he knew exactly what was going on. He had made his 
peace with God. He asked me to help him make some estate 
arrangements. We are very close to his widow, who still lives 



271 



here in Austin. It was a great loss to us, because he was a 
unique individual, Kelberer. Just delightful. He was also a 
good fisherman, so--. 



272 



IV OVERVIEW 



What Made Aramco Unique 



Marinovic: To wind up this long thing, I want to give you some of my 

impressions of what made Aramco a unique place. See, there 
were all kinds of concessionary oil companies in the Middle 
East. You had the Kuwait Oil Company, the Iraq Petroleum, the 
Qatar Petroleum, you had the Iranian Consortium. Aramco was 
just another concessionaire company in the Middle East. 

However, there was one basic difference, and that is that 
all of these other concessionaire companies were staffed with 
parent (owner) company people who would be sent out for two 
years, for three years. They were not career Kuwait Petroleum 
Company people. They were career Gulf people, or they were 
career BP people, and so on. 

Aramco, at the very beginnings, was staffed with Standard 
Oil of California people and Texaco people. But by the time I 
came in, all of the top management people had walked in off the 
street. They had never worked for an oil company, except for 
Aramco . 

Hicke: Do you know who made that kind of decision? 

Marinovic: I don't know how it was made. I don't know whether it was a 
deliberate decision, or maybe the shareholders, the owner 
companies, had some problems getting their good people out into 
the desert. The other thing is a few of the early pioneers 
established very good relations with the local government 
authorities and with the king. 

Hicke : Who are we talking about now? 

Marinovic: [Floyd] Ohliger, and [Fred] Davies. Floyd particularly. 



273 



Hicke: But Peter [Speers] was telling me that they had this 

consultant, Mr. Guin, who went around- -he decided that people 
should be recruited specifically for Saudi Arabia, so maybe 
that was part of it too. 

Marinovic: Yes. Obviously studies had been made and so on. But if there 
was a strong desire on the part of the shareholder companies to 
have only their people, they would have done it. For some 
reason or another, it went the other way. The fellow who 
hired me, the treasurer, Ed Voss, had worked briefly for 
Standard Oil of New Jersey before transferring to Aramco. So 
that's why he still asked Standard Oil Company, "Do you have 
any good candidates for this job?" And that's how I came in. 

Very soon, people developed the attitude that this is a 
career job, that there are possibilities, if you are a certain 
type of individual. Because obviously, a typical sedentary 
type may not even apply for a job like this. You had people 
who were adventurous, who were impatient, who wanted to do 
things, who wanted to see things. 

Hicke: Adventurous spirits. 

Marinovic: Adventurous spirits, basically. So this was, I think, one of 
the factors. Then, of course, you had the pioneering spirit. 
"When we first did this," or "when we first accomplished that," 
and "when we first connected this pipeline." And really, there 
were accomplishments, because these people were working against 
incredible odds. They adapted to circumstances which were 
remote from anything that they had known in their previous 
lives, in terms of work conditions, in terms of people. 

The other thing was that because of the nature of the 
animal, very close social connections were established, and a 
very active social life developed. There was nothing outside 
of Aramco , so all the entertainment was done at home , and there 
was a lot of it. We had an excellent school system, a really 
first-class school system, through ninth grade. After the era 
of the roustabouts and so on, when Aramco became a more 
developed company, when we needed a lot of professional talent, 
you couldn't get people unless you provided decent schooling. 
So we had an excellent school system through ninth grade, and 
then a very generous plan to finance the schooling of your 
children through high school abroad. 

So, for example, our two boys graduated from school in 
Dhahran, ninth grade, and one went to Hotchkiss, and the other 
went to Middlesex, two top prep schools on the east coast. The 
company paid 85 percent of the tuition, plus they gave them 



274 



Hicke: 
Marinovic : 



Hicke: 



three round trips a year to come home for Christmas, for the 
Easter recess, and for summer. 

We had an incredible array of activities out there, and 
the company took a very wise position. They said, "Look. You 
people organize yourselves and we'll try to help you out. But 
the company's not going to run these things." So the company 
built the golf course, for example, or the tennis courts. But 
from that point on, you handle it. You run it. You organize 
it. 

So we had these so-called self -directed groups, which 
ranged from the tennis club to the golf club to the bowling 
club to the bridge club to the ladies' club to some really 
esoteric groups. You had a very active philatelic group, and 
they became quite well known. In fact, two of them were 
elected Fellows of the Royal British Philatelic Association, 
because of their research in some obscure realm of stamps. 

You had coin collectors, you had antique collectors, and 
then you had an extremely active travel group, the so-called 
DOGs. The Dhahran Outing Group. Every long weekend, they had 
a trip arranged to Shiraz, to Isfahan, to Cairo, to Beirut, to 
all kinds of places. People did a lot of traveling. Until the 
late seventies, the system was that you had a two-year 
employment "contract," even though you didn't sign any 
contract. This goes back to the old days when people actually 
signed a two-year contract. We were career employees, but you 
had a two-year contract. At the end of the two-year contract, 
you had three months ' leave . 

Three? 

Yes. At the end of the first year, you had two weeks' local 
leave. For your long vacation, the company bought you or gave 
you the cash for a first-class round- trip ticket to your place 
of origin. And somehow, for some reason or another, gradually 
everybody seems to have had a place of origin in Alaska or 
Oregon, even people that I know were born and raised in 
Brooklyn. 

So people did a tremendous amount of traveling. You would 
go on long leave, and maybe spend a month gallivanting through 
the Pacific. Then you spent a month at home in the States, and 
then maybe you spent a month in Europe . 

Where can I sign up? 



275 



Marinovic: 



Hicke: 
Marinovic; 



Prices were different then in Europe and the Far East. So with 
your Aramco pay, you went only first class. You wouldn't 
consider staying in Hong Kong anywhere but at the Peninsula 
Hotel. It was very cheap in those days, relatively speaking, 
if you were on a dollar payroll. So there was a lot of 
traveling. People would join with foreign groups for more 
adventurous things. I think we had people going trekking in 
the Himalayas before everybody had ever heard of it. Or they 
would rent a houseboat in Srinagar, in Kashmir, spend a week 
there. 

It was really a very closely knit group, and of course, 
you had people you couldn't stand, and you had people who were 
very close friends. But there was a certain broad group 
solidarity, which was- -I wish that there had been a good 
sociologist that spent twenty years with Aramco and just 
figured out what made the Aramco people tick. 

Another thing, for example, in every major company that I 
know that works in developing countries--! talked to people who 
worked for the Panama Canal administration, mining companies 
around the world, oil companies- -apparently , the social 
relations are hierarchical. You know, the vice president 
invites all the other vice presidents for dinner, and then the 
other vice presidents reciprocate and so on. It's all by 
layer. 



It went like this. 



In Aramco, this simply did not exist. 

[demonstrates] 

Vertical. 



Bob Brougham, chairman of the board, he had always his tennis 
buddies, socializing with them. The golf group, the bridge 
group, or parents of friends of your children were the focus of 
social life. And the husband may be a mechanic or he may be a 
vice president. What helped this social diversification a 
little was the fact that housing was the most precious 
commodity in Dhahran. We were always short of housing. It was 
not the best kind of housing. So we had a very complex point 
system to qualify for housing. The biggest weight in the point 
system was service. So you did not have an executive section 
of town and then the rest of the crowd lived away from there. 
It was all interspersed. 

By the way, the number of bedrooms you had depended on the 
number of children. According to Aramco, the official incest 
age was eight, because if you had two children of different 



276 



ages, you rated another bedroom by the time the children 
reached eight years of age. [laughs] 

And you know, you can still see this Aramco solidarity, 
for lack of a better word. One of the reasons that you have a 
bunch of former Aramco people here [in Austin, Texas] is again 
this kind of gravitating toward each other. 

Hicke: Yes, that intrigued me, too. 

Marinovic: In this connection I'll have to tell you about Pete Speers, his 
sense of humor. 

I visited Pete before we bought this house here. I was 
still working in Arabia. He was already retired. I was 
chatting with him and I said, "You know, Pete, I still don't 
understand this thing. How come all of these Aramcons have 
congregated here in Austin? It's like a lemming instinct." 
[laughter] No reaction from Pete. 

Six months later, I bought a house here. I was still out 
in Arabia. And one day I get a letter from Pete which started 
"Dear Mr. Lemming." 

Anyway, you have a whole bunch of Aramcons here. We have 
a spring picnic, everybody gathers in Zilker Park and we have 
100, 120 people show up. Then we have a Christmas party. Then 
we have an Old Geezers' lunch, a stag lunch every third 
Wednesday of the month, once a month. And you have ten people 
show up, fourteen, six, depending. 

And then, of course, we have several very close friends 
from Arabia who live here, and we'd see them a lot. There are 
a lot of people who worked for Aramco that I see at a picnic, 
and otherwise I don't see. A couple of miles from here lives a 
fellow who joined treasurer's six months after I did, and he 
worked for thirty years with me or for me. And every morning 
we see each other at the gym; we go to the same gym. 

Life with Aramco was a unique experience. You had people 
who had all kinds of interests- -for example, pot picking was 
another favorite leisure time activity. Have you heard about 
pot picking? 

Hicke: Well, Ellen [Speers] just was telling me about it. 

Marinovic: You had people who became known experts on the archaeology of 
pre- Islamic Arabia and so on. I never got seriously into pot 
picking. I remember once, the chairman before Jungers, Listen 



277 



Hills, whom I knew well because he worked In The Hague while I 
was in The Hague for a while, and he said, "Why don't I take 
you pot picking?" So we went pot picking. We went about 100 
miles out of Dhahran, and there was an area that looked to me 
just like another stretch of desert. Listen said, "We're 
looking for beads." I said, "How do you look for beads?" 
"Well, you just look at the sand, preferably on your hands and 
knees, and you see little black beads." I said, "Fine." 

So I thought, well, that's no problem. I collected a 
whole handful of them in no time. So I said, "Hey, Liston, 
look." He said, "Baldo, these are dried sheep droppings. What 
we're looking is something that's one -tenth the size." 
[laughter] I gave up on pot picking. 

Hicke: Tell me about relations with the Saudis. 

Marinovic: A typical question that I'm being asked by many people is how 

did you get along with the Saudis? And it's a question that is 
very difficult to answer, because it's really a multifaceted 
problem. In the early days when the Americans came to the 
Eastern Province of Saudi Arabia, there was nothing. There 
wasn't a school in the whole Eastern Province. Everybody was 
illiterate. So obviously, the Americans were a little bit like 
something coming out of Mars. Ice was something unknown. The 
biggest favor you could do to anybody is give him a piece of 
ice. 

Because of this, at first, the Americans were the big 
bosses, and the Saudis were the little, uneducated peons. Very 
early in the game- -and I must give credit to the pioneers and 
even the top brass in Chevron, which ran Aramco in those days-- 
Aramco realized that we had to develop a local workforce. And 
at that point, Aramco started schools and training programs. 
Gradually, the Saudis started rising in the workforce through 
the ranks, at first displacing third- country nationals, 
Pakistanis, Indians, and so on, who had clerical and lower 
technical positions, and then later displacing Americans. 

But one thing that I think helped the whole process was 
that the company made it absolutely clear to everybody that a 
very important factor in judging the performance of its 
American employees was their success in developing Saudis. 
That became one of the most important criteria in judging and-- 

Hicke: Performance evaluations. 



278 



Marinovic: Yes. It wasn't lip service that the company was paying to it, 
just to satisfy the government. It became something deeply 
embedded in the Aramco culture. 

Now, the personal relationship with Saudis at work varied. 
I had individuals working for me that came to me with all kinds 
of personal problems, and I was their big father, in a certain 
way. There were individuals that worked, said hello and were 
very nice, worked well, and went home. I didn't know much 
about them. 

Now, social life: there were some Aramco individuals, not 
many, who did establish some kind of a social interchange with 
Saudi employees and their families, but it was very few, and it 
wasn't a very profound or deep relationship. The cultural 
barriers simply made it impossible. One of the biggest 
problems, of course, is the status of women. You always had 
stag parties. You could not ask a typical Saudi to bring his 
wife. 

Now, gradually, you had a number of Saudis who were quite 
sophisticated, educated abroad, contractors, bankers, and so 
on. Their wives were educated abroad. With that particular 
group, you had a more normal social interchange. But it was 
purely work-related. In other words, they would invite you, 
you would invite them, because somehow you were connected 
through work. There was no real personal relationship. 

Of course, Aramco made tremendous efforts to teach its 
American employees Arabic. Now, Pete Speers for instance, was 
fairly fluent. 

it 

Marinovic: Gradually, as the general well-being spread and the Saudis 

became richer and richer, and they started making more money 
than their U.S. counterparts at the saiue level, relationships 
tended to change. At that point, quite a few of our U.S. 
employees became nervous about their positions, about their 
careers, and so on. So we introduced a system where people who 
were replaced by Saudis and lost their jobs, and there were no 
other jobs for them in the company, and who had done a real 
good job in preparing the Saudis to take over the job, were 
given very generous severance allowances. 

Hicke: Well, that's pretty nice. 



279 



Marinovic: To encourage them to develop the Saudis, and of course, also to 
ease the blow. 

Hicke: Yes. It's kind of hard to work yourself out of a job. 

Marinovic: Now, there was a distinct change in atmosphere in Arabia after 
the Islamic revolution in Iran. Until then, Aramco almost 
enjoyed almost an extra-territorial status in a certain way. 
The Saudi police kept out of our Aramco camps, which are really 
small cities. We had our own unarmed security force. Women 
could drive inside of our camps. We had in our supermarkets a 
pork store where you could buy pork products, the only place in 
Saudi Arabia where you could have pork products. 

And we, of course, had religious services for Christians. 
We had Catholic priests there, and to solve the problem of the 
multitude of Protestant denominations, they somehow got lumped 
into two large groups : there was a high church 
group- -Episcopalians, Anglicans, and so on- -and officially the 
group was a self -directed group, just like the tennis club. It 
was called the Canterbury Group. Then, the Baptists and the 
Methodists and so on, they had a minister, and they were known 
as the Fellowship Group. And the Catholics were the R.C. 
Group . 

Now, this whole thing was illegal under Saudi law. But 
old King Abdul Azziz had given oral permission for it, to bring 
in some ministers or priests. Anything that the old king had 
approved, his successors were very loath to disapprove. It was 
a little bit like enshrined. 

Of course, the whole thing had to be conducted quietly, 
sub rosa. You could not have a church. We had mass in the gym 
or in the theater. The priest had the biggest house in camp, 
and all the walls were knocked out, so it was used as a chapel. 
We had every two years a Christmas pageant on the baseball 
field, which was a total community effort. I mean, literally 
700, 800 people worked at it, erecting half a city of 
Bethlehem, and we had camels, sheep, angels, choirs- -it was an 
incredible production, and became the biggest attraction in the 
Eastern Province. Every Saudi there came to watch this thing; 
they were absolutely enchanted with the whole thing. As things 
tightened up we had to discontinue it. 

Of course, alcohol was totally illegal, and of course we 
all had booze in our houses. We were all making it ourselves. 
For a while, there was a pretty good smuggling network, but 
pretty soon the authorities stopped that. I think smuggled 
whiskey was about $100 a bottle, which was too rich for one's 



280 



blood, so we all had stills at home. There was a tremendous 
pride in who makes better booze. Since we had a lot of 
chemical engineers, we really perfected this thing. I mean, 
the stuff was absolutely outstanding. [laughter] And you knew 
who made bad booze, so you had a drink at home before you went 
over to their house. 

Then, after the Islamic revolution in Iran, fundamentalism 
started creeping in. The Saudi government became quite 
concerned about being out -maneuvered by the Iranians. You 
know, it's a little bit like in the old days, when the 
communists were more afraid of the Trotskyists on the left than 
of anybody on the right. Well, that's the way the Saudis were. 
They were terrified that somebody was going to be a better 
Muslim than they were, and so at that point, they started 
clamping down to prove that they are just as good Muslims as 
anybody else. 

Of course, the country had also prospered. Prosperity was 
there, so they felt their oats, and they started tightening up. 
For example, all of a sudden we couldn't have Christmas 
decorations on the outside of our houses in camp. 

Hicke: About what time? 

Marinovic: Oh, I would say late seventies and early eighties. At a 
certain point, the police came into camp and arrested the 
priest in Abqaiq. He was released the same day, but next we 
heard that there was an order that there would be no more 
Christian religious services. 

So at that point, our top man, who had excellent contacts 
in Riyadh, went to Riyadh and went to see the chief of 
intelligence, or the king, and said, "Look, this is going to 
have a very serious impact on our Christian employees. After 
all, King Abdul Azziz approved this thing," and so on. It was 
just before Christmas. And then the king or whoever it was in 
Riyadh promised that they'd send orders to the authorities in 
the Eastern Province not to implement this directive. The 
Saudis had a wonderful system. They never revoked anything; 
they just wouldn't implement it. [laughter] 

Well, Christmas Eve came around, and of course, we had a 
huge turnout, and a packed theater, everybody was there for the 
midnight mass. 

Hicke: And Saudis there too? 



281 



Marinovic: No. And I spent that whole Christmas Eve at the gate, the main 
gate of the compound, with a walkie-talkie waiting for the 
gendarmes to bust In, because we didn't know whether the local 
authorities had received this revised order or not. I had a 
walkie-talkie and Kelberer had another- -Kelberer was also 
Catholic. If the gendarmes had come, 1 was supposed to hold 
them up as long as possible and try to argue with them, to give 
time for everybody else to vacate the premises. 

Things calmed down for a while. Then one day we heard 
that there was going to be a police raid on the chapel. So at 
that point, Kelberer called me and called a few other people, 
we rushed over to the chapel with a truck. We loaded all the 
paraphernalia into the truck- -crucif ixes , statues, you 
know- - [laughs] just loaded the truck, and then drove the truck 
right into Kelberer 's home, into his garage, and closed the 
garage door. We figured nobody was going to bust into his 
house . 

We started having problems with American women, regarding 
what they wore when they went to the local towns . The 
religious police started spraying legs that were exposed with 
black paint and started harassing people. That was also the 
time of the long hair. The kids would come from the States on 
vacation with long hair-- 

Hicke: Oh, the boys. 

Marinovic: And they would grab them and cut their hair. You had to be 

awfully careful about the booze. If you had a cocktail party 
at home, you did not sit outside in plain view with glasses; 
you had the party inside or in an enclosed patio, where you had 
privacy. Generally, things became more and more unpleasant. 
And we just kind of rolled with the punch. But the pressure 
was on, and the feel of total freedom just vanished. 

To a certain extent even the feeling of total security 
started to disappear. Earlier, when I came out, let's say in 
the fifties or even in the late sixties, early seventies, you 
had this feeling of absolute security. I would take the boys 
and we would drive out in the desert 150 miles and camp 
somewhere. And all of a sudden, out of the sand would pop up 
some Bedouins. We would invite them over, and they would have 
tea with us, and then they would invite you to their tent. You 
felt so absolutely safe and secure. 

I always kept all my doors open. I don't think we had a 
key to our house. You would drive down to the local town, and 
you would park as near the store as you could. You would leave 



282 



the key in the ignition, the windows were all rolled down. 
Then you would go into the store, buy whatever it is, walk by 
your car, toss the package in through the window on the seat 
and walk on, go on shopping. And I still have not quite 
adapted to a different reality, I often still leave my front 
door open. 

Well, with the influx of 2 million third-country workers, 
even that became a little bit iffy. You started worrying about 
theft, about this, about that. You didn't feel like going 
camping very far with women and children. The atmosphere had 
changed. 



Retirement 



Hicke: Tell me about how you left and retired and moved to Austin. 

Marinovic: Well, normal retirement age in Aramco is sixty. And all of a 
sudden, I saw this confluence of things. I was going to be 
sixty within a month of having thirty years of service with the 
company. And my youngest child, our daughter, had just 
graduated from school there and had to go away for school . 

Now, we lucked out with the boys while they were in 
boarding school. They did very well, we didn't have any 
problems. And you know, these were the turbulent sixties and 
seventies. And I've had a number of my friends who would get 
these phone calls saying, "Your son or your daughter has just 
been expelled from school, pick him up," and you're 9,000 miles 
away. 

So I said, "I don't want to run another risk. So that's 
it, I'm leaving." So I wrote a letter of resignation to 
Kelberer saying, "Officially, I am now resigning as of 
such-and-such date, and so on." (Normal retirement was sixty, 
but it wasn't mandatory.) And, "Will you please sign below 
accepting my resignation." Because then, this triggered 
getting a packing date and the preparation of all the 
paperwork. Until you had your supervisor sign off your letter 
of resignation, nothing happened. 

So a week went by, two weeks went by, nothing happened. 
So I asked John, "How about this letter of resignation?" He 
said, "Ah, ah, ah." Wait another week, nothing happened. So 
one day he was in Riyadh and I went to his secretary. (She 
also lives here, by the way, in Austin.) I said, "Cathy, let 



283 



me get into John's desk." Every once in a while she would ask 
me to help her, because he would have desk drawers like this-- 

Hicke: Piled up high. 

Marinovic: When he was away, she would ask me to sort his desk drawers out 
and throw away whatever wasn't important. So I went and rooted 
around his desk, finally I found my letter of resignation. I 
pulled it out and put it on top of the pile and put a little 
sticker saying, "Urgent." Fine. 

Wait another week, nothing happened. I said, "John, about 
my letter--" nothing happened. So I sat down and I wrote a 
very formal letter, on company stationery, saying, "To the 
chairman of the board, Arabian American Oil Company, Dhahran: 
Dear Sir: As assistant to the chairman of the board, I feel it 
is my duty to point out to you that you may be albeit 
unknowingly breaking one of the laws of the kingdom of Saudi 
Arabia, our host country, whose laws we are bound to respect," 
et cetera, et cetera. 

"You may not be aware of the fact that His Majesty King 
Khalid signed on such-and-such a date a royal decree outlawing 
slavery." [laughter] "Accordingly, I urge you to conform to 
the laws of this country, our host country, and sign my letter 
of resignation." [laughter] And the next day he walked into 
my office with this letter- - [pulls out paper] -- 

Hicke: Handing you the letter. 

Marinovic: --and he said one unprintable word. [laughter] He then signed 
my letter of resignation. So I finally got out. 

The fact of the matter was that Kelberer wanted me to stay 
one more year as he was planning to stay on another year. As a 
courtesy I then advised the president, who by then was a Saudi, 
that I was leaving. His reaction was somewhat unexpected. He 
said "You know, that's not the time to go. You are showing 
lack of confidence in this process of Saudization, you're a key 
person in this whole process, and now you're leaving. This is 
not acceptable." 

I said, "Ali, look. I can stay another three months, six 
months, so what? What difference does it make? When you make 
up your mind to go, you go." I didn't want to linger on, and 
I'm glad. 

Hicke: Well, it's nice to be needed, but--. 



284 



Marinovic: So I took off, and I've been here since '85, and enjoying 

retired life enormously, and wondering how I ever had time to 
work at a job and do all the other things that have to be done 
or that I enjoy doing. 

Hicke: Oh, that's great. You've just been wonderful, and I can't 

thank you enough for all the information and the great stories, 



Transcriber: Shannon Page 
Final Typist: Melody Meckfessel 



Regional Oral History Office University of California 

The Bancroft Library Berkeley, California 



American Perspectives of Aramco, the Saudi-Arabian Oil-Producing 

Company, 1930s to 1980s 



William L. Owen 
NEGOTIATIONS AND LEGAL AFFAIRS OF ARAMCO, 1947-1980 



Interviews Conducted by 

Carole Hicke 

in 1993 



Copyright 1995 by The Regents of the University of California 




William L. Owen 



TABLE OF CONTENTS- -William L. Owen 

Interview History 
Biographical Information 

I BACKGROUND 

Childhood and Education 285 

Early Work Experiences 
U.S. Navy 

Marriage and Family 293 

II ARAMCO 296 
Joining the Company 
Company History and Personnel 

Establishment of the State of Israel, 1947 302 

Saudi Government Railroad 314 

Negotiations 316 

Leadership Styles of Early Company Officers 320 

Tapline Becomes a Subsidiary Company 325 

7 9 ft 

Boundary Disputes 

Aristotle Onassis 

Other Arbitration 

Aramco Overseas Company 

Agricultural Projects 342 

Need for Tapline Declines 344 

Aramco Realty Corporation 346 

Moving the Offices to Texas 346 

Aramcons 

Corporate Structure 

Government Relations Department 

General Counsel 

Pricing Negotiations 

Negotiating Saudi Ownership Participation 

Life in Arabia 385 



INTERVIEW HISTORY- -William L. Owen 



Bill Owen obtained a law degree from Harvard Law School in 1937. 
After several years of law practice in New York and Washington, D.C. and 
a stint as a naval officer in World War II, he joined Aramco in 1947 and 
started work with the Trans-Arabian Pipeline Company (Tapline) in Beirut, 
Lebanon. He held various legal and executive positions with the company 
itself, with Trans-Arabian Pipeline Company (Tapline), and with 
affiliated companies, spending many succeeding years in Saudi Arabia. 
His duties required that he negotiate with the Eaudi Arabian Government 
on problems of the oil concession agreements and with other Middle 
Eastern governments on problems with Tapline. As general counsel of 
Aramco from 1961 until his retirement in 1975, Owen managed all the legal 
affairs of the company worldwide, including counseling the board of 
directors and key executive management committees. 

Owen was interviewed on May 7 and 8, 1993 in his office at Aramco 
Services Company in Houston, Texas. He reviewed the transcript and made 
a few changes. His papers can be made available for donation to an 
appropriate repository. 



Carole Hicke 
Senior Editor 



September 1994 

Regional Oral History Office 

The Bancroft Library 

University of California, Berkeley 



Regional Oral History Office University of California 

Room 486 The Bancroft Library Berkeley, California 94720 

BIOGRAPHICAL INFORMATION 
(Please write clearly. Use black ink.) 
Your full name 'SJ / JL L I Gl I T" 



Date of birth ^ / * _ Birthplace /^ *~Te*f / g , fx ,3, 

Father's full name /S&v'Jq, Mi / /A/. FRS: r~, Q Vy <c .*/ _ 

Occupation /"3^^7/S.T /Wf*-r~/e Birthplace /^a <^"\ Oc?/?/v<sr /? S 
Mother's full name A/*/Sl<*S&# A^y^ Z 

Occupation fcfccj. "^"x? c>tCfj 
Your spouse 



Occupation Jf-nXiff* &'L<X*r44, /6.^'*f<ifc Birthplace 
Your children \/JJLL.i/\*l L^ ^c-^j ^. ^ 



Where did you grow up? 



Present community //c o s 7 ^ /^ _, I 



i. Hf+s-f 'Xi 1:641^ , 

Occupation(s) /k/^ ^ "/ <** '; ^^5-^<r^^ ^jx.iJc<.< -ft v' cr , 



Areas of expertise -'<3 ^^^/i"^ /C^wu j (fe?x/T^ /< c 



Organizations in which you are active f"* 



i" <? O 



<r " 6V ' '- 



Education '//".<-.*.*, ds^^L. Gi.i-6if' ^KKl? -A^/ fjeoi. ; >J, 

* <f > *'*- 



Other interests or activities ^^^/C ] //t-'^Tg^ ', $^o^-r s ; QL,Q 



285 



I BACKGROUND 



[Interview 1: May 7, 1993 
Childhood and Education 



Hicke: Let's just start this morning with when and where you were born 
and grew up . 

Owen: Did I send you a copy of my resume? 
Hicke: I have it, but I'd like to get it on tape. 

Owen: I was born in San Antonio, Texas, August 26, 1915. And I'm a 

graduate of William Jewell College, which is a small college in 
Missouri where I received my B.A. in 1934. 

Hicke: In what? 

Owen: I was majoring in political science. Then I went to Harvard Law 
School, and was graduated from Harvard Law School in 1937. As of 
a couple of years ago, I was still the youngest graduate Harvard 
Law School ever had. I graduated from Harvard Law School at 
twenty- one, from college at eighteen. 

Hicke: How did that happen? 

Owen: My mother had been a schoolteacher, and they just kept skipping 
grades when I was in elementary school. I just was two or three 
years ahead of myself. 

Hicke: So you skipped grades up through high school? 

Owen: Yes. 

Hicke: So you must have entered college at a very young age. 



286 



Owen: Since I was born in August, and college started in September, I 
was barely fifteen when I entered college. 

Hicke: Was that ever a problem socially for you? 

Owen: No, primarily because 1 was interested in athletics. I was a 
pretty fair tennis player, and even as a freshman I made the 
school tennis team. 1 made the junior varsity basketball team at 
that age, and went on to get my varsity letters in basketball, 
football, and tennis, even though I was two or three years 
younger. 

Hicke: My word! 

Owen: One of the reasons I chose Harvard Law School was because Dr. 

Manley 0. Hudson, who had been the U.S. judge on the World Court, 
under the League of Nations, was the professor of international 
law at Harvard. He was a William Jewell man, and a fraternity 
brother of mine (Kappa Sigma) . My roommate in my fraternity was 
the son of a federal judge in Colorado who had been Manley 
Hudson's roommate. I visited Judge White in Colorado many times, 
and he told me all about Manley Hudson. I saw him a few times. 

Manley wrote me a letter and said, "You know, I think you 
could get into Harvard Law School if you wanted to." So I became 
very friendly with Manley Hudson, and that led to my interest in 
international law and also to my going to Harvard. 

Hicke: So obviously you took whatever courses you could along that line. 
Owen: Yes. 



Early Work Experiences 



Owen: When I left law school, it was in 1937. Jobs were pretty hard to 
come by. So I took a rather unusual approach several months 
before. I tried to put the burden on the other foot. Instead of 
saying, "I would like a job with you," "I would like to interview 
to see if I would like your area of the country," and I sent 
these out to ten or twelve of the law firms in major cities and 
told them when I'd be in those cities. And surprisingly, 
although many firms were not interviewing, that usually got me an 
entree. They were just curious as to who would have the gall to 
do a thing like that. 

Hicke: Yes, because people were walking the streets, knocking on doors. 



287 



Owen: Yes, they were. So I had an open sesame, just by that particular 
thing. 

So I had offers from various firms across the country, 
including one from Harry Truman, then a senator for Missouri who 
offered me a job in his office in Washington. I was about to 
settle in Los Angeles, because I was interested in entertainment 
movie law too. There wasn't anything in international law at the 
time, and I thought that would be a good substitute for a while. 

I was ready to accept a position with a big Los Angeles firm 
when I got a call from a firm I had interviewed in New York, 
"Wild Bill" Donovan's firm, William J. Donovan, who was later 
head of the OSS [Office of Secret Services]. I had talked with 
him in New York, and he had offered me a job. I said, "Well, 
this is my second stop." Boston was the first. "I mustn't 
accept a job yet." 

So he called me in California and said, "Look, I'm in charge 
of the defense in the Madison Oil cases," which was the big case 
with- -am I going into too much detail? 

Hicke: No, this is wonderful. 

Owen: There were eighty-four defendants, most of the major oil 

corporations and their officers, a criminal price- fixing case. 
It was an exciting trial. It was in Madison, Wisconsin, and 
later Robert H. Jackson of the Supreme Court, who was Attorney 
General at that time, made the public statement that when asked 
why he picked Madison where none of the oil companies were based 
and which was an inconvenient location, he said, "Well, it's hard 
enough for the government to win an antitrust case, so we thought 
we were entitled to a favorable judge and a favorable jury. So 
we got a New Deal appointee judge, and we got a--" Wisconsin was 
very antibusiness. 

So that was a good experience. Donovan called me and he 
said, "You've got to let me know within a couple of days, but I 
would like to take you with me to Madison, and you can sort of be 
my aide. You can carry my books, so to speak." So that's what I 
did in the Madison Oil cases. 

Hicke: You leaped right in, feet -first. 

Owen: Yes. And then Donovan didn't have a Washington office, so after 
the Madison Oil cases, arrangements were made for me to join, 
become a partner in a small firm there, to which the Donovan 
business, much of it, came. In the course of which, I tried some 



288 



cases before the naval contracts Board- -Board of Contract 
Appeals. 



U.S. Naw 



Owen: I got a call one day from the navy in April of 1941 asking if I 
could come over and have lunch with the Judge Advocate General, 
Admiral Thomas Gatch, who was then Captain Gatch, who was later 
the captain of the U.S.S. Missouri at the time that the Japanese 
surrender occurred on his ship. 

I was in what I thought was pretty tall cotton, because 
there were four admirals at the table and myself. I wondered 
what I had done in my cases before the naval contracts board, if 
I had offended them, what in the world. I couldn't imagine what 
they wanted with me . 

So it developed that they all said, "As everybody really 
knows, there is not only a possibility but a probability that 
we're going to be in war before too long. We have a spot we want 
you for." The navy ran Guam and Samoa at the time. "And we 
would like you to go through some special training, V-7 training, 
and get a line commission, and then we'll transfer you to the 
Judge Advocate General's office as a Law Volunteer special, and 
make you the legal officer of Guam. If you do that, it will mean 
that a very important lieutenant commander will be in position to 
take over the command of the cruiser Indianapolis, who's now the 
legal officer on Guam." 

Hicke: Oh, you were going to replace him? 
Owen: Replace him. That's all they wanted. 

So I thought, "Well, that sounds exciting," so I took a 
leave of absence from my Washington law practice and went to this 
V-7 training in Chicago, where I met my wife. That isn't quite 
accurate, because I had- -she was a friend of a friend I had in 
Washington and I had momentarily run into her in Washington, but 
just to talk briefly. So I met her there, and I went through 
this training, after which I embarked for Guam, after having gone 
through line training in San Diego to become a director of 
fighter aircraft on aircraft carriers, using the new invention of 
radar, which the Japs didn't yet have. 

On December 7, 1941, we were thirty-six hours off Guam. 



289 



Hicke: On a ship? 

Owen: On a ship, the U.S.S. Chaumont , in command of the convoy. There 
were twenty-eight ships in convoy, and things were getting pretty 
desperate at that time. So our convoy commander decided, only a 
few hours from Pearl Harbor and unknown to anyone, since we were 
on complete radio silence, not to sail the usual route. He went 
200 miles south. This has always been interesting to me, because 
I heard Tokyo Rose's first broadcast on December 7. It consisted 
of two parts: one, report on the damage inflicted at Pearl 
Harbor, and she was completely accurate. As a matter of fact, 
there was more damage than she reported. But then she reported 
the sinking of a twenty-eight-ship convoy, and named every ship 
in the convoy, including of course the Chaumont . 

Hicke: In your convoy, as you were listening! 

Owen: Because they had Japanese submarines waiting for us on the old 
route that the U.S. Navy had been using for some time. So we 
took the convoy south to the Fiji Islands and then to Brubare, 
Australia, and then up through the Macassar Straits to the East 
Indies hoping that we could reach the Philippines with our 
cargoes including some 50 P 38 fighters. We made it to Chiltize 
(Java) and then we were all destroyed in the Battle of the Java 
Sea, except a couple of ships, including mine (then the U.S.S. 
Black Hawk escaped to Perth, Australia. 1 

By that time, I had lost all interest in being a legal 
officer; I became a gunnery officer. I served the whole war in 
the Pacific, as a gunning officer, a communications officer, and 
a navigation officer, during which time I tried numerous court- 
martials and was Judge Advocate in numerous cases of 
investigation, because lawyers of my rank, as I went up, were few 
and far between. So I kept busy both in the line and in law. 

Hicke: Can I just interruptI'm sure it's in the recordbut who was 
the astute commander of the convoy who sailed you out of harm's 
way? 



'Probably irrelevant to all of this, but, for whatever it's worth, in 
all the tragedies and disappointments of the early days of World War II, I 
was reported as of 12/8/41 as "killed" or "missing in action". So my 
friend and client Ted Malone of "Between the Bookends" came on NBC, devoted 
his program at noon on 1/1/42 to a eulogy of me. I was, of course, happy 
later to chide him and tell him to check his facts in the future! 



290 



Owen: It was Captain Davenport Brown. 

Hicke: Were there any cases of particular memorable interest that you 
tried during the time you were in the navy? 

Owen: Yes. The invasion of Leyte in 1944 in the Philippines was 

delayed more than four weeks because an ammunition ship, fully 
loaded, had just gotten in to our base at the Island of Leyte in 
the Admiralty Islands from San Francisco, was right in the middle 
of everything. And we were leaving the next morning on the Leyte 
invasion. It blew up, and there was nothing left of the ship 
except just still water where it had been. It took a number of 
ships up with it too, and it caused a lot of havoc, and it caused 
us to have to delay the invasion. 

But the same day, I was put on shore duty and made Judge 
Advocate of the Board of Investigation on it. That lasted for 
weeks- -actually, I missed the first part of the Leyte invasion 
because I was still in this Board of Investigation. It was at 
Manus Island in the Admiralty Islands, and that was a closely 
kept secret for a long time, because they just didn't want the 
American public to know that we had had all the casualties and so 
on that we had there. This is another story. 

Hicke: Was it treason or something--? 

Owen: Oh, no. It was just an accident. What it was, was they were 

loading ammunition from the U.S.S. Mt. Hood- -and it took weeks of 
investigation to find this out, but we reconstructed exactly what 
happened. There was only one hold on the ammunition ship that 
was open; it was number five. That's the farthest aft hold, 
toward the after part of the ship. It only contained detonators. 

They were loading those detonators into cargo mats down in 
the hold, lifting them up by the ship's crane and taking them 
over the side of the ship and depositing them on barges to go to 
various cruisers, battleships, and other war ships that needed 
detonators. Detonators are very, very sensitive. 

That morning, the regular crane operator on the Mt. Hood-- 
that was the name of the ammunition ship- -I've been asked to 
write a book about this, by the way, but I've never had the 
time- -came down with appendicitis and had to be taken ashore 
about a half an hour before this. There were three men with him 
in the whale boat taking him ashore to the base hospital there, 
and that's how we got a lot of the information. They also 
carried the ammunition inventory of the Mt . Hood with them, and 
that's how we knew. 



291 



What had happened was that the assistant, the "striker" you 
called him in the navy, was perfectly qualified, but he just 
accidentally dropped a loadnot outside the ship into the water, 
onto the waiting barges --but he dropped it back in the hold, and 
the whole ship just went up. I was at that time seven miles 
away, standing next to my captain, and we were both knocked off 
our feet on the ground, seven miles away on the sea. It was 
tremendous --one of the biggest blasts in history, before the 
atomic bomb . 

Hicke: Did it change the way detonators were handled? 

Owen: Well, they certainly were very concerned about it, and they 
issued all kinds of --but they had all kinds of safety 
precautions, and you just sometimes can't avoid human error. 

Hicke: Yes, that is dramatic. 

Owen: So that was one navy experience. 

I had another one which might be interesting as a matter of 
history. And history is what you're interested in. I bought a 
copy of a set of books on World War II, encyclopedia of World War 
II, and I don't know whether this is in there. But our secret 
weapon toward the end of the war when the tide turned was the 
secret of the island atoll group of Ulithi. Did you ever hear 
that name? 

Hicke: No. 

Owen: What we'd do is send the Pacific fleet out, and they'd engage the 
Japanese in a battle, and we were beginning to get the best of 
them, but we'd suffer our losses too, and so the fleet would then 
have to withdraw and go back to Pearl Harbor, or so the Japs 
thought. Therefore, the Pacific fleet couldn't return back to 
action until forty- five to sixty days, at the very best. 

But those ships didn't come back to Pearl Harbor. They cane 
to this wide place in the Pacific, narrow islands or shallow 
atolls, and we had air bases and so on there. We had absolute 
security cover, three levels of it day and night, so the Japs 
never knew. We would just bring the ships in as far as Ulithi 
where we had our repair ships and all, and they would paint out 
the numbers on the carriers, destroyers and cruisers, make them 
something different. 

So whereas the Third Fleet had come in within two weeks, the 
Fifth Fleet went out to engage the Japs again. Same ships. 



292 



Hicke: Oh, for heavens sake! 
Owen: You ever heard that? 

Hicke: A federal judge, he's in San Jose now, told me the story of two 
different fleets, and I think it was these two fleets -- 

Owen: Third fleet and the Fifth fleet. 

Hicke: That had different personnel and they had different missions, in 
a sense- -I've forgotten what he said- -he didn't go into this kind 
of detail, but I think it must have been the same story. 

Owen: Well, the Third fleet was commanded by Admiral Halsey, Bill 
Halsey. The Fifth fleet, Admiral Spruance. 

Hicke: That's the one. 

Owen: And same ships. The Japs thought we had twice as many fighting 
ships as we had. 

Hicke: That's fascinating. 

Owen: Which wasn't very good for their morale. 

Hicke: What were the islands -- 

Owen: Well, they were atolls -- 

Hicke: But it wasn't in any--? 

Owen: They were very shallow. There was some deep water between them, 
covering an area of, oh, maybe 100 square miles, ten miles square 
in there. The reason I remember it so well is I went from where 
my ship was anchored at one end to another on Easter Sunday in 
1945, and [laughs] got caught in a typhoon in a fifty- foot motor 
launch in between atolls. We made it all right, but it was an 
exciting thing. Another story. 

Hicke: I can well believe it. How long were you in the Pacific? 

Owen: I was in the Pacific until the end of the war. I was transferred 
to Newport R.I. to become navigator of the new light cruiser 
Fargo . probably the most advanced of the fleet, and arrived in 
San Francisco on V-J Day. So my Red Cross driver who got 
me.... all of the sudden the news broke while I was in the station 
wagon, and I said, "Look, do you mind taking my bags out to the 
Palace Hotel- -I'd just like to go up to the Top of the Mark." 
She said, "Absolutely." 



293 



Hicke: So there you were on V-J Day. 

Owen: Yes. But I still had to commission this new ship. They took a 
while to- -I didn't get mustered out until December. 



Marriage and Family 

Hicke: Had you gotten married before you left? 
Owen: No, I got married halfway through the war. 
Hicke: And your wife was living where? 

Owen: She was in Chicago. She was an interior decorator for Marshall 

Fields, a speech therapy major in college, and so we were married 
in February 1944. Our oldest son was born in late November of 
1944. Then we had afterwards four more children, five in all. 

Just as a matter of interest, this oldest son, who is my 
namesake, Junior, he was killed in the Vietnam War. He's buried 
in Arlington National Cemetery, with practically every medal that 
the U.S. can bestow except the Congressional Medal of Honor. 

The rest of the kids are all fine. My next oldest son, 
Rick, is senior partner in a law firm in Orlando, Florida, and I 
have two grandchildren by him. My daughter, Randa, who is 
divorced, is-- 

Hicke: R-a-n-d-a? 

Owen: Yes, that's an Arabic name. We were thinking of Sandra when we 
were in Beirut, and our outside counsel in Lebanon, Habib 
Abi-Chahla, who was the first president of Lebanon after World 
War II, was over at our house one night, and he said, "What names 
have you been considering if this should be a girl?" We were 
talking about both boys and girls, and we mentioned a couple, and 
among them we mentioned Sandra. We hadn't settled on anything. 

He said, "Why don't you give her an Arabic name if it's a 
girl? We have some beautiful names, and there's one that's very 
close to a name you mentioned, Randa. It's the name of a desert 
flower . " 

Hicke: Oh, how nice! 



294 



Owen: So she is an international tax counsel for Citibank, being 
transferred to London in September in charge of all the 
international tax affairs in Europe in the Middle East. 

My third son I was just with in Dhahran, and my two 
grandchildren out there. 

Hicke: He's living there? 

Owen: He's living in Saudi Arabia. He never wanted to do anything but 
settle in Saudi Arabia. As a matter of fact, he went to the 
University of Arizona at Tucson because he didn't want to get 
away from the desert. Can you imagine! Two of my boys went 
there. I let them go to school wherever they wanted. So I just 
spent seven or eight days with him just before I saw you. 

Hicke: Is the fourth with Aramco? 

Owen: Yes. He went to William Jowell College after Culver Military 

Academy (where three of my four sons went) and still wanted to go 
back to Arabia at first opportunity. And then- -I'm going into a 
lot of detail. 

Hicke: No, this is good. 

Owen: Well, this will give you an idea. All of these kids, all of our 
children, all five of them, loved Saudi Arabia. 

Hicke: I think that says a lot about both Saudi Arabia and Aramco. 

Owen: All of them wanted to go back. My daughter Randa particularly 

wanted to go back. But unfortunately, at just the time that she 
and Rick got out of law school, I was still general counsel, so I 
couldn't take them in the law department. Just wouldn't have 
been right. So they had bad luck in that respect. 

But Tom didn't go to law, and I was retired by the time he 
got out of --he took his A.B. in business administration and 
Middle Eastern studies. He speaks Arabic like a native. My 
fourth son, David, with his lovely wife Paula and two sons, lives 
just about five or ten minutes from me in Sugar Land. 

Hicke: Does he work here? 

Owen: He works here. 

Hicke: Because I got him on the telephone by mistake one time. 

Owen: Oh, yes, David. 



295 



Hicke: I just asked for Mr. Owen, and didn't realize- - 

Owen: Well, if you ask for Mr. Owen, since I've been retired for 

seventeen years, I'm just a consultant, they'll give you the 
employee naturally. 

Hicke: I think you weren't here at that time. 

Owen: No, I was in Cairo sitting on a arbitration, and in Dhahran to 
conduct a seminar and see the kids. But at any rate, that's a 
rundown on that. 

Hicke: Well, we left you at the Top of the Mark on V-J Day. 

Owen: Oh, the Top of the Mark, yes, and I went out to Newport, Rhode 

Island, and I was there for the commissioning of the Fargo light 
cruiser, and I got separated from the service at Newport, and 
resumed my law practice. 

Hicke: Same law firm in Washington? 
Owen: Yes. Hinton and Heron. 



296 



II ARAMCO 



Joining the Company 



Owen: After I'd been back just a little over two years, in 1947, I got 
a telephone call from a Mr. George W. Ray Jr. , in New York, who 
had been in the Madison Oil cases with me. At the time of the 
Madison Oil cases, George Ray was the Assistant General Counsel 
of Texaco. He and I worked together. Donovan was very anxious 
to have a complete chronology put together, something that would 
interest you. 

#1 

Hicke: --you put together a chronology of-- 

Owen: I assisted- -Donovan lent me to George Ray to work with him on 

this chronology, and we had a chronology of many thousand pages 
on everything that happened in every location in the United 
States in the oil industry in the early thirties. It showed 
every tank carload of gasoline that went from a place in Oklahoma 
to a place in Arkansas, and all of that- -it was a pretty 
elaborate kind of thing. 

Hicke: Where is that? Is it the court records, or just in your files? 
Or the Donovan law firm files? 

Owen: No, I do have most of the papers, but I didn't keep the 

chronology. I don't know what happened to it. The Donovan firm 
probably still has it, since it was one of the most important law 
cases in the U.S. up to that time. 

Any rate, I had gotten to know George Ray in that case. So 
he called me and he said, "I've just been made General Counsel of 
Arabian American Oil Company; did you ever hear of it?" I said, 
"No." He said, "Well, it's an exciting company. I think it will 
grow to be the biggest producing company in the world. I am 
assembling my staff, and I've talked to Bill Donovan about this. 



297 



He thinks it would be a good opportunity for you to be on my 
staff, and I think it would be too." 

I said, "Oh, George, gee, thank you very, very much for the 
confidence you show in me, but I've been out at sea for five 
years. I'm just getting used to the States." He said, "Well, 
we'd send you to a pretty nice place to begin with: Beirut, 
Lebanon." I said, "Where in the world is that?" 

Hicke: [laughter] It's in that whole other half of the world, and the 
desert as opposed to the sea-- 

Owen: Yes. He said, "Look, why don't you come up to New York and have 
lunch with me first day you can arrange it. I'd really like to 
outline this thing to you." I said, "Okay, George, but I don't 
think I'm interested." I went up. 

After about two hours I called my wife Peggy and I said, 
"How'd you like to go to Beirut?" She said, "I don't think I 
would." Again, she said, "Isn't that at the far end of the 
Mediterranean?" I said, "Yes," but I looked at maps; I didn't 
know where it was either. It was a pretty nice place, 
apparently, and that's where we'd live, although I'd be away from 
home taking care of the legal aspects of building a pipeline over 
four countries there. 

She said, "Well, I'm perfectly happy where we are, but if 
you'd like to, okay. We'll just move. But isn't this a little 
sudden?" I said, "Yes, I'd had no idea. I told you about this," 
I said, "but I told you I wasn't going to be interested. But 
I've changed my mind." 

She said, "Okay," and so I gave due notice. I worked in the 
Washington and New York offices just to familiarize myself with 
Aramco, and at that time, Aramco was in the process of 
transferring Aramco headquarters from San Francisco where its 
offices had been to New York. I want to add something here. As I 
told you, I'd worked with Donovan, Ray and so many others in the 
Madison cases, and had no doubt they would be fair. George Ray 
knew that I was doing reasonably well financially as a young 
lawyer, so I knew he wouldn't offer me an opportunity to my 
financial disadvantage, so I never even asked about salary. I 
knew it would be O.K. (And it was.) 

So I accepted the job. 
Hicke: But you went to work on Tapline? 



298 



Owen: Well, Tapline and Araroco had a common law department, so I was in 
the Aramco -Tapline law department. George Ray was general 
counsel of both, and I was chief counsel for Tapline. 

Hicke: What did he tell you that made you change your mind? 

Owen: Well, he told me about the geological discoveries that they'd 

made so far, and how promising it looked, and that it was a real 
challenge. It just sounded exciting to me, and I've always been 
adventurous, so I decided that was it. 



Company History and Personnel 



Owen: Let me go back a little. I'm sure you know this, but if you 

don't have this down on the record someplace, you should. Aramco 
was originally California Arabian Standard Oil Company. Standard 
Oil Company of California (Socal)--now Chevron, of course- -was 
interested in Saudi Arabia. The British were too, but not to the 
extent the Americans were. They just frankly didn't see the 
possibilities. Their information hadn't been as favorable as the 
information that Socal had. They had sort of an inside track 
because King 'Abd al- 'Aziz--that' s Ibn Saud--was somewhat 
reluctant to grant the British a concession, because he thought 
they'd try to colonize and take over the country. He didn't feel 
that way about the Americans . 

Hicke: I think he was right on track. 

Owen: [laughter] He didn't feel that way about the Americans, so 

Standard of California ended up with this concession, which was 
signed and executed May 25, 1933. The first commercial discovery 
was in '38, I believe- -' 37 , '38, I think it was '38-- 

Hicke: It was Dammam Number Seven, wasn't it? 

Owen: Yes, Dammam Number Seven. When was it? 

Hicke: I think it says right here in this newspaper, March 3, 1938. 

Owen: So I was on track there, yes. March 3, '38. But when they began 
to assess that in the next few months, Socal wasn't big enough to 
handle that field and do justice to it. So Socal, which was at 
that time run by- -you ought to check this particular name- -[Harry 
C.] Collier, chairman of the board of Socal at the time I'm 
almost sure it was Collier- -went to a meeting of the American 
Petroleum Institute or whatever, a trade association meeting, and 



299 



was engaged in conversation with W. S. S. Rodgers ("Star") 
Rodgers, of Texaco. They made a deal whereby Texaco would come 
in and be a 50 percent partner. With Texaco' s marketing 
facilities added to Socal' s, they thought they could handle 
everything, 50-50. 

Hicke: Socal didn't have the downstream facilities, I think. 

Owen: They didn't have the downstream that Texaco had, and Socal needed 
that. Or rather, Socal needed that at the time. So that was the 
beginning really of Aramco, Arabian American Oil Company. They 
changed the name from "California Arabian Standard Oil Company" 
to "Arabian American Oil Company" (which was always referred to 
as "Aramco") . 

Hicke: In the forties sometime. 

Owen: Yes. This process took- -yes, and I'm a little vague- -as a matter 
of fact, I think I have that stuff in my office right now. We'll 
take a look at some of the things I have in the office later. 
But I'm just going from memory at this point. 

Hicke: That's great. This is excellent. 

Owen: Saudi Arabia continued to produce during World War II, and the 

small refinery at Ras Tanura manufactured some refined products, 
helped the war effort in that way. So they discovered the Ghawar 
Field sometime after the war. [discussion on spelling] 

Hicke: Pete Speers is obviously an expert on transliterating these 
names, I think. There's a standard Aramco glossary. 

Owen: Yes. So they had the combined downstream facilities of Texaco 

and Socal, and they were combined together in Caltex, which still 
exists with headquarters in Dallas; it's the joint marketing and 
operation of the two. One of the Aramco lawyers I hired is now 
the general counsel. 

Hicke: Who is that? 

Owen: Frank W. Blue is general counsel of Caltex at this time. 
Irrelevant, but I was just throwing it out. 

So Aramco decided they had to have two other companies to 
put up capital and market the oil. They offered to let Exxon, 
then Standard Oil Company (New Jersey) and Socony-Vacuum (now 
Mobil) join the venture. Well, they were both interested, but 
Socony-Vacuum, as they'd been in the past twenty years, were very 
conservative, and they didn't want to take too big a stake in 



300 



this because they thought they were risking a lot of money. So 

they would only take 10 percent. Exxon, or Standard (New 

Jersey), was very happy on that; that meant the other three could 

have 30 percent. So it was 30, 30, 30, 10. You have that story 
in various publications. 

Now, there was a problem at the time after World War II, and 
it was anticipated before the end of World War II that there 
would be oil shortages, and they were going to need as much 
production as they could get from Arabia for their use in Europe 
to rebuild Europe, and also some for the Far East. At that time, 
it was a slow process to transport oil by tanker around the Cape 
of Good Hope, down around the southern tip of Africa. 

So the four companies decided to form a company, 
Transarabian Pipeline Company (Tapline) , not an Aramco 
subsidiary. It was 30, 30, 30, 10 owned in the same proportions 
as Aramco was owned. And build a pipeline across the desert, 
over the mountains, going over Saudi Arabia, Jordan, Syria, and 
ending in south Lebanon. 

There was an alternate route that had been considered which 
was a little farther south, which would have ended in Palestine 
instead of Lebanon, but of course, the unrest in Palestine began, 
and even before the partition and all that kind of thing, they 
just decided they'd be better off to go to Lebanon. 

There was one difficulty on that. It was very hard to 
secure pipe. Pipe was needed after the war. So, through a 
series of negotiations with the State Department and in 
Washington, Washington felt that this was to the advantage of the 
U.S., so they paved the way for Tapline to get the pipe it 
needed. 

Hicke: Were you involved in these negotiations? 
Owen: No, this was before I came in. 

Hicke: As I understand it, this oil played a crucial part in the 
Marshall Plan. 

Owen: It did, yes. 

Hicke: So that explains part of the-- 

Owen: Explains part of the interest of the U.S. government in it. 



301 



But an interesting sidelight on that is William R. Chandler, 
Bill Chandler, who was Tapline's chief engineer --he was a young 
engineer from Socal-- conceived something that saved millions of 
dollars and months and months. A simple thing of nesting pipe. 
Instead of having a thirty- inch pipeline, to have it thirty 
inches in some places, thirty-one in other places, and they could 
nest the thirty- inch into the thirty-one, and carry twice as much 
pipe on ships. Have you ever heard that story? 

Hicke: No, I've never heard that one. 

Owen: Well, that was what made Bill Chandler famous. 

Hicke: To get the pipes over there and in place? 

Owen: Yes, from here. 

Hicke: What a great idea! 

Owen: Yes, so simple. Why hadn't anybody ever thought of it? As a 

matter of fact, Bill was the chief engineer of Tapline, and then 
later he became president and chief executive officer, and he 
spent his whole career in Beirut with Tapline. He wasn't 
interested in coming to Aramco and going with the bigger picture, 
although he had the chance, he loved the pipeline. He was Mr. 
Pipeline. 

John Kelberer started with Tapline and he, as I recall, John 
showed up- -I think his family was about a week behind him; he had 
several children at that time- -but John Kelberer showed up as a 
communications engineer for Tapline in either October or November 
of 1950. See, I'd been there three years then, and I was going 
to- -I left at the end of 1950, left Beirut. But I did work with 
John Kelberer for those couple of months there, and he went on to 
come to Aramco as vice president and later as chairman of the 
board and chief executive officer. John was a great friend, and 
I believe one of the outstanding oil men forever. 

Hicke: Are we up to the point now where you joined Aramco? 

Owen: Oh. Yes, when I joined Aramco, as I say, I familiarized myself 
with the whole operation in New York, because Aramco 's 
headquarters had been moved from San Francisco- -some remained out 
there, but they were in the final process of moving. 

Hicke: Who headed their New York offices? 

Owen: At that time, well, W. F. Moore, who'd been vice president of 
purchasing for Texaco, was then the president of Aramco. Now, 



302 



always, the owner companies split up and shared, one or two years 
at a time, the chairmanship of the board. So for a while, up 
until the early fifties--! think at that time, I'm not sure, I 
think V.S.S.(Star) Rodgers was chairman. 

And Burt Hull was president of Tapline. He is the one who, 
during the war, became quite famous by building the Big Inch and 
Little Inch pipeline in record time. So he became president of 
Tapline. H. H. Hall, Harry Hall, engineer from Socal, became the 
second in command in Tapline, and was stationed in Beirut when I 
went there . 



Establishment of the State of Israel. 1947 



Hicke: How long were you in New York? 

Owen: Month and a half, two months. As a matter of fact, I arrived in 
Beirut the day before the petition was announced. So I had just 
been introduced to my secretary (Renee Yared) , who incidentally 
spoke and transcribed in English, Arabic, and French, and she- -I 
was just getting acquainted, and we were chatting away when this 
mob of some one thousand mad Lebanese stormed the Tapline 
offices, because of the partition of Palistine. They were 
throwing rocks and so on, rocks were coming through the windows. 

So she said, "Let's get under the desk," so I got acquainted 
with her under the desk. [laughter] The police came and broke 
it up. Bill Chandler went out on the balcony to talk to the 
crowd and got hit with a rock. 

Hicke: What was the problem? 

Owen: Well, the partition of Palestine. The beginning of the Israeli 

thing. I've mentioned that Harry Truman offered me a job when I 
finished law school (I was his campus campaign manager ar college 
in 1934 and we always remained friends), but I went with Wild 
Bill Donovan's law firm. As great a president as he was, he knew 
nothing about international affairs, and did the U.S. and the 
world a massive disservice in pressuring the Philippines to vote 
for partition and thus created the greatest cancer of the last 
fifty years. 

Hicke: What year are we? 

Owen: We're in 1947, we're in '47. November '47. 



303 



Hicke: Okay. Establishment of the state of Israel. 

Owen: Yes. Which almost spelled the end of all American enterprise out 
in the Middle East, and if it hadn't been for the goodwill the 
Saudis had toward the United States, they were a moderating 
influence, and they considered the Palestine problem, the Israeli 
problem, as separate from their other relationships with the 
United States, and continued to support us and give us help 
there . 

Hicke: That's important. 

Owen: Oh, very important. We'd have been kicked out. 

Hicke: King 'Abd al-'Aziz and his-- 

Owen: He was primarily responsible, yes. Great friend to the U.S. 

Hicke: So Tapline was your first day or two in Lebanon? 

Owen: Yes. It was my first full day at the office in Lebanon. I had 
left- -and Peggy was- -we had two boys at that time- -she was going 
to bring the two children over the next month. But after this, 
there was such unrest there that it was about ten months later 
before I brought her over. 

Well, there were a couple of the wives, two or three of 
them, already there. Bill Chandler's wife was there. Don 
Wallace's wife, Melda, was there. 

Hicke: What were the conditions you were working under while all this 
was going on? Was it constant trouble? 

Owen: No. Outside of this one uprising, why, the Lebanese government 
protected us very, very well. And the great majority of the 
Lebanese people were clearly our friends . 

Now, we always found the Lebanese government very easy to 
deal with, and I think they respected the fact that we dealt 
fairly with them. We had the Concession there at the time that I 
joined Tapline, but there were some other agreements that we had 
to make which I negotiated out there with the Minister of 
Finance. They were very reasonable people to work with, and we 
had a good relationship. 

Hicke: Concession to put the pipeline through? 



304 



Owen: Pipeline through, yes. We called those Conventions rather than 
Concessions; it's really a Concession, but we talk about the 
Aranco Concession and the Tapline Conventions. 

Hicke: Means agreement of some kind. 

Owen: Yes, that's right. 

Hicke: And then did you have to negotiate with the other countries too? 

Owen: Yes. Now, by that time, we had also signed an agreement, a 

convention, with Jordan, but not Syria. Syria was very tough to 
deal with. So one of my major duties outside of negotiating side 
agreements with the Lebanese and the Jordanians was to get that 
Syrian convention. That was fairly exciting. 

We had, under Harry Hall, who was the executive vice 
president of Tapline stationed in Beirut- -the two principal 
actors in this were Sandy Campbell, that's William A. Campbell, 
who had been professor of Greek at Dartmouth [College] , and 
professor of --oh, he discovered the ruins in Turkey- -Archaeology 
at Princeton. And he was also OSS. He worked for Donovan, very 
interesting, and he was head of our Government Relations then and 
I was head of the Law. So the two of us made daily flights. 
We'd leave early in the morning and go to Syria almost- - 

Hicke: Damascus? 

Owen: Damascus, we'd go right to Damascus. And just as it seemed we 
were getting someplace, something would go wrong. They would 
shake hands and say, "Everything is settled- -except there is one 
small point--" 

Hicke: Who was head of the government? 

Owen: At that time, it was a constitutional government, and I have 
forgotten the name of some of the leaders at the time-- 

Hicke: President or something like that? 

Owen: Yes, they had a president, but he was a figurehead. 

Hicke: Whom were you dealing with? 

Owen: We were dealing with the minister of finance primarily. It 

looked like everything was going to go fine. Habib Abi-Chahla 
from Lebanon, our Lebanese counsel, had notified us that he heard 
from his Syrian friends that there were enough votes in the 



305 



General Assembly to put this thing through and ratify the Tapline 
convention. 

The night it was to be ratified, there was a coup, and Husni 
Zaim took over. Husni Zaim was a fine man and a benevolent 
dictator. As a matter of fact, Time magazine in April of 1950 
had his picture on the cover, "Syria's Benevolent Dictator." He 
did a great job. The corruption was awful under the 
constitutional government there. You didn't know whom to deal 
with, no strong people, and so he just took over, and didn't 
intend to continue being a dictator. He wanted to return it to a 
constitutional government at the proper time. 

My first relationship with him was the day after the coup, 
when Sandy Campbell (who remained until his death one of my 
closest friends) and I went over and asked for an audience. We 
went in, and he greeted us very warmly. He said, "I imagine you 
all are somewhat disheartened because you had very high hopes of 
your convention being ratified. I want a couple of days to study 
this. I know a lot about it right now. But I'd like you to come 
back in two or three days, and we can talk." 

And we did that, and he said, "Well, I've looked at it, and 
I think it's going to be good for Syria. It's going to give us 
employment, it's going to be--" 



Owen: "--it's going to give us employment, and it's going to renew our 
contacts with people from other countries. We've been very much 
isolated, and too much so, in the past. So I am prepared to sign 
the Convention today and have it ratified by my Council of 
Ministers tonight." 

So he did. Sandy and I went back to Beirut, got there in 
the middle of the night, and I went to the Tapline office 
building where all the families were waiting, and everybody was 
cheering. It was a very big celebration: we had gotten the 
pipeline. That meant Tapline would go ahead, and it had been 
held up. That was crucial. We had to have that acreage in 
Syria. 

Hicke: Was this 1947 still? 

Owen: Oh, no, no, we're in '49 now. 

Hicke: You've been going back and forth- - 

Owen: Yes, we'd been going back and forth for a while. 



306 



In the meanwhile, Bechtel, the great engineering and 
construction firm of San Francisco, was building the pipeline 
from Abqaiq in Saudi Arabia westward while Williams Brothers of 
Tulsa, Oklahoma, was building it- -they were contractors to 
Tapline- -eastward from Sidon, Lebanon, to meet in Saudi Arabia. 
Even though we had no assurance this was going through, the 
companies kept putting their money in, so that they wouldn't lose 
time. They had enough confidence that somehow we'd work this 
out. I think they had more confidence than I had at the time! 
[laughing] 

Hicke: What was Sandy's part in this? 

Owen: Well, Sandy was very personable, very admired and respected by 

everyone. He was our good diplomat. I was a little bit tougher 
negotiator, and Sandy didn't have the technical knowledge of the 
legal terms of all of that that I had that we needed. After the 
pleasantries, we agreed I would take over; we were one hell of a 
team. 

But what happened, the next day, we of course sent- -we 
didn't have faxes in those days, and we didn't have reliable 
telephone service, so we had to cable in code, and we cabled the 
events of the day before. We thought everybody would be happy in 
the States. Well, they were, but the lawyers got together and 
said, "Yeah, but will this hold? Suppose he's overthrown? Is 
this a de jure government?" 

So George Ray cabled me and he said, "Come back; the owner 
companies are nervous." Here Manley Hudson enters the scene, of 
Harvard, my old friend, and George said, "As you know, we've used 
Manley Hudson on some opinions in the last couple of years. Now 
we want to use him on this opinion. I want you to come back and 
work with him in the States on an opinion as to whether this 
ratification is binding or not." 

Hicke: That means you have to decide whether this government is going to 
last? 

Owen: Yes. Well, if the government doesn't last, whether we still- - 
Hicke: Oh, you might still have a chance that even if-- 

Owen: Yes, whether we've got a good agreement or not. So I went back 
and I worked with Manley Hudson on that for about a month. We 
formulated this opinion which was signed only by Manley, because 
we wanted it to have all the prestige in the world, and we didn't 
want it to be co-authored by anyone, although I actually worked 
with him on the whole thing. 



307 



We got back to Lebanon, and Zaim invited Sandy Campbell, his 
wife, Gisella ("Gisi," who as his widow now lives in Houston, and 
is my frequent companion) , who was the Hungarian teenager whom 
he, while he was with the OSS in World War II, parachuted into 
Hungary, and her attic was his safe house. Her family took him 
in and hid him from the Germans. 

Hicke: You two had a good time trading stories, I bet! 

Owen: Yes. As a matter of fact, Gisi called me just a couple of weeks 
ago. She's moved to Houston. We're going to have lunch sometime 
soon. 

Hicke: Oh, that's marvelous! 
Owen: She's a real doll, yes. 

So Sandy and I got back with this opinion in 

whichbeautifully written opinion- -in which Hudson said that 
this was definitely a de jure government by all the standards of 
international law, and that this was a binding agreement and 
would be so recognized by the family of nations. 

Hicke: Had this government been recognized by the U.S.? 

Owen: Oh, it was recognized the next day. It had been recognized by 
most of the governments. It was, as I said a while ago, it was 
welcomed. Zaim's picture on Time magazine on the cover as the 
benevolent dictator, and lauding the fact that we at last were 
getting another nation into line, some kind of cooperation with 
us. And the pipeline was very important. 

So when we got back- -can we stop a minute? 
[tape interruption] 
Hicke: You were just going to tell me another interesting anecdote. 

Owen: Sandy and I had just gotten back to Beirut, and we were armed 

with this Hudson opinion. Actually, Sandy had come back while I 
was working with Manley Hudson on this for the two of us to 
present this to the full board, the Tapline board, and we were 
all satisfied with it. So we went back to Beirut, and Zaim 
sponsored the annual Red Crescent Ball, which is like the Red 
Cross, in Bludan, Syria, which is a mountain resort just east of 
the Bekaa Valley, which is shared by Lebanon and Syria. 

So we went as guests of the president, President Zaim, the 
dictator. Our wives, and Zaim and his wife, and we had a very 



308 

nice ball. Then it came the time to raise some money for the Red 
Crescent, so they auctioned off Zaim's fountain pen with which he 
had signed the Tapline Convention on an American auction. They 
called it an American auction. Nothing American about this, when 
I tell you what it was. [laughter] 

The fountain pen with which he had signed the Tapline 
convention was put up, and the Master of Ceremonies couldn't 
imagine that Mr. Campbell and Mr. Owen would let it go to anyone 
but themselves. What you do at an American auction: let's say 
you bid $100, and someone else bids $200. And you have to pay 
$100, the other guy has to pay another $100 to make the $200. 
Then the next guy bids $1,000; he has to pay $800, whether he 
gets it or not. 

Sandy and I were in a spot. We didn't know what our Board 
of Directors were going to think about this, but we ended up 
paying about $60,000 for Zaim's Parker pen that he had signed the 
convention with. [laughter] 

Hicke: And wonder if it was going to come out of your pocket, probably! 

Owen: And wondering, oh, boy. As a matter of fact, the Directors were 
very understanding about the whole thing. 

Hicke: The Board? 

Owen: The Board. But on that night- -that was the night scheduled for 

Zaim's assassination, and he was to be assassinated at this ball. 

Hicke: Oh, my! 

Owen: And we noticed when we went in that there was a great shuffling 

of military personnel. They looked confused and scurrying hither 
and yon. The presence of four Americans wrecked their plans, so 
they didn't--! had this told to me two weeks later by the trigger 
man who later carried out the assassination when Zaim went to his 
home that night at 3:00 a.m. His name WPS Colonel Kalass [it 
means f initi--f inish off.] 

Hicke: That was his name? 

Owen: Well, yes. So Zaim was assassinated. 

Hicke: So only your presence put it off? 

Owen: Yes. Zaim was assassinated immediately afterward. We were 

hardly home. We had to drive back from Bludan from the party. 
We'd said good night to Zaim and his wife, our host and hostess. 



309 



We'd gotten In bed, and about five o'clock, we were both awakened 
by our communications people who said they'd just heard over 
Syrian radio that Zaim had been assassinated, and that Colonel 
Henawi had taken over. 

Colonel Kalass is the one who told me the story about it. 
Very apt a name. 

So this was at five o'clock. About seven o'clock we got 
another call, people who'd been monitoring the Syrian radio, that 
Henawi had declared a Law of Nullities nullifying everything that 
Zaim had done, every law he had passed, every ratification he had 
made, everything he had done. 

Hicke: Good grief. 

Owen: So Sandy and I got our airplane and asked for an audience with 
Henawi the next day. Sandy let me do the talking. We got in, 
this dictator who turned out not to be a benevolent dictator. He 
was a pretty rough customer. We made no comment despite our 
revulsion, because this was political, what they had done the 
night before. But I expressed absolute abhorrence in the 
strongest terms at this Law of Nullities, and particularly as it 
applied to the ratification of the Tapline Convention. I said I 
had right here in my hand an opinion from the former chief judge 
of the World Court, one of the most respected and influential 
international lawyers in the world, saying that it was a valid 
act and it couldn't be undone by any subsequent government. 
That's what the opinion said. 

He was taken a little aback at that. He called in his legal 
advisor, whomever he was going to use as legal advisor, and this 
guy didn't know nothing from nothing. He said, "Oh, well, 
Colonel, you can do anything you want." 

I said, "Well, I think I'd be careful of that. If you want 
Syria to be respected by the rest of the world, and accepted, 
you'd better go easy on modifying international commitments that 
have already been made and that are valid." I think Sandy was a 
little- -he was such a nice guy- -a little apprehensive of the tone 
I was taking with the dictator his first day in power. 

So they asked us to wait until- -this was about ten or eleven 
in the morning, and he asked us to come back at four in the 
afternoon. Apparently by four, they had reviewed this whole 
thing, and Henawi said to me, "Whatever report you've got of my 
remarks, my announcements over the Syrian radio this morning, I 
was misquoted." [laughter] He said, "What I did is I announced 
a Law of Nullities on everything except the one international 



310 



commitment that my predecessor had made, and that was the Tapline 
Convention. It remains valid." 

So by that time, Sandy got in, "Well, when can we begin 
operations?" "Right away!" But that was a pretty exciting time. 
But I never- -can you imagine getting a legal opinion and having 
it ready for just that kind of thing, being able to produce it? 
And it just turned the tide, because otherwise, if we hadn't had 
it then, he'd have carried out the Law of Nullities, and then 
he'd have been in so deeply that he couldn't say, "I was 
misquoted. " 

Hicke: He would have lost face if he'd had to back down. 
Owen: So that's that. 

Hicke: Very good. That's amazing. So what year are we in now? I've 
kind of forgotten. '49? 

Owen: This is '49. So we began work in Syria. We engaged- -we didn't 

trust anyone in the Syrian Bar. As a matter of fact, the counsel 
that I had engaged, Nairn An-Taki local counsel in Syria, he was a 
very timid man, and he called me by long distance the day that 
Henawi had succeeded to power and said, "I don't want anything to 
do with Tapline. I do not want to be associated with losing 
causes," and so on. I said, "Well, if that's the way you feel 
about it, okay." 

So I called Habib Abi-Chahla, the former president of 
Lebanon. I said, "Can you represent us in both Syria and 
Lebanon?" He said, "Yes." So I got Abi-Chahla to do it, instead 
of --Nairn An-taki. 

Hicke: I'd say you have a fabulous memory, coming up with all these 
names. So he didn't get in on the good thing? 

Owen: No. So we got Henry Cattan. Habib Abi-Chahla recommended 

Cattan. He'd been an outstanding Palestinian lawyer who was a 
refugee in Lebanon. 

Hicke: Cattan? 

Owen: Cattan. [spells] He's written a number of books on the Middle 
East conflict. He and his lovely wife Eva and their children 
became our close friends. He died just last April in Paris. A 
wonderful man. So Abi-Chahla set it up with him, and Abi-Chahla 
arranged that he be given temporary admission to the bar of 
Syria, which was a difficult thing to arrange, but he did that at 



311 



a low level. So we put Henry Cattan in charge of acquiring all 
the land for Tapline's right of way across Syria. 

Because of curious Syrian laws, where you had a right of 
way, it had to be all on one piece of paper. So we had to paste 
and hook paper together until we had a twenty-nine-foot-long 
document. Instead of twenty-nine pages, it was twenty-nine feet. 
You'd roll up that-- 

Hicke: A scroll or something like that! [laughing] Oh, that's 

wonderful. Now, when you acquired the land, you actually owned 
the property, or you just acquired sort of a right of way--? 

Owen: Oh, no, a right of way through it. We didn't want to own any 

property; we just wanted the right of way. So we were able to do 
that, and our people rushed in, the Williams Brothers people. 
They had finished in Jordan and they'd finished up to where they 
wanted to meet in Saudi Arabia, there was just this gap in Syria 
about- -if I can recall correctly, fifty-five miles. Maybe just 
fifty-five kilometers. I've just forgotten. I've got a map in 
my office, I can check that. 

So after this exciting time of Zaim when Henawi took over, 
he respected his word, and cooperated with us. We were able to 
arrange, make contracts with the Syrian railroad that it would 
cooperate with the Lebanese railroad in hauling pipe through the 
mountains and so on. Everything went smoothly, and we finished 
the pipeline. 

The first oil went through the pipeline on December 1 of 
1950. So I stayed around for two more weeks, and then took a 
ship and took a vacation for about three months, and then showed 
up at Aramco . 

I didn't tell you one thing about this that may be 
interesting. I only accepted this position with George Ray for 
Tapline for two years, so I just took a leave of absence from my 
law firm. Two years was about over, and I wasn't about to leave 
at that time. George wrote me, "Well, you were just to stay two 
years. I assume that you'll be willing to stay until the 
pipeline is finished," and I told him I would. 

Then, I had no intention of going to Dhahran, and I told 
Peggy we weren't going to Dhahran. But George was pretty 
persuasive. The opportunity professionally was great there, 
because the fact the company was building, and we were in on the 
ground floor of a great enterprise. And it turned out to be a 
good decision. 



312 



It was not until 1970 that 1 was taken off the leave list at 
the Donovan firm in New York, and the Hinton firm in Washington. 

Hicke: You were still on leave of absence! 

Owen: For twenty- three years! [laughter] I finally said, "Look, 

there's been enough of this." But when I retired from Aramco in 
late 1975, the Donovan firm offered me the position of senior 
partner in their London off ice- -and I refused because I wanted to 
return to the States. 

Hicke: They kept hoping you'd return. Well, before we move to Dhahran, 
I'd like to hear just a little bit about life in Beirut. 

Owen: Life in Beirut was --it's a very social place. The Lebanese are 
very hospitable. 

Hicke: It was a very cosmopolitan city, I-- 

Owen: Very cosmopolitan. It had very heavy French influence. French 
and Arabic were spoken even more than English, which is still 
true today. It was a very pleasant place to live. The climate 
was wonderful there. It's right on the Mediterranean. We had a 
beach house we'd go to for weekends and sometimes in the summer 
in the afternoons after work, just about two miles outside the 
city there. We could, in the month of April, we could swim on 
Saturday morning until about ten or eleven, and then drive up to 
the mountains and ski all afternoon. 

Hicke: Oh! That does sound nice. 

Owen: So the mountains rise right from the city there. And it was a 
very social place. The St. George Hotel there was the hotel of 
intrigue. All the intrigue in the Middle East happened at the 
St. George Hotel around the bar. Journalists and intelligence 
operatives for Turkey, USSR, and I'm afraid U.S. too, and 
Britain. So- -well, Kim Philby's headquarters were there. His 
father was St. John Philby, and you know he's written a number of 
books on Arabia. 

Hicke: Yes. Did you travel around Lebanon any? 
Owen: Oh, yes. 
Hicke: Baalbek and-- 

Owen: Yes, Baalbek, and there are several castles. Beaufort Castle. 

And just over the border into Syria, there is a wonderful castle. 



313 



What's the name of that? And the Bekaa Valley is just beautiful 
with the Roman ruins there . 

Hicke : Roman ruins , did you say? 

Owen: Roman ruins. We did a lot of traveling. In my position of 

dealing with the government, Sandy's position of dealing with the 
government, H. H. Hall's position, why, we had a lot of duty 
things we had to do every week. There were cocktail parties 
every night. We would try to just make an appearance and be seen 
and be nice to people, and excuse ourselves because we had to 
work or whatever, and so on. But Peggy, she just loved it. And 
the kids- -I sent my two boys to French school. They were just 
very young there. They could speak French, Arabic, and English 
by the time they were four and six. 

Hicke: And did you have a strong relationship or any relationship with 
the U.S. Embassy and other people from America? 

Owen: Oh, yes. Well, there wasn't an embassy; at that time, it was a 
legation at the time we were there. But we had a very good 
minister there. They were very supportive of us. So it was a 
very happy place to live, and people were so friendly. Our 
friends were Muslims and Druze (which is really a sect of 
Muslims), Christians- -all of them, and they just lived together 
beautifully. I can think of no finer place to have lived. 

Many people who had spent time there would have retired 
there. Some of them did, but they left when the civil conflicts 
began in '75. But they thought that was the best place in the 
world to live. It's the San Francisco of the Middle East. 

Hicke: Or San Francisco is the Beirut of the West Coast? 
Owen: [laughter] whatever. They both have a charm. 

Hicke: Okay. Well, that sounds very intriguing, and a very fascinating 
place to be. At the time you were there, anyway. 

Owen: And of course, as I progressed from position to position, I held 
similar comparable positions in Tapline and Aramco. For 
instance, when I was chief counsel of the Middle East, I was 
chief counsel for Tapline, I was chief counsel for Aramco. When 
I became associate general counsel, it was for both companies. 
And incidentally, for AOC, Aramco Overseas Company, also, in 
Holland. 

Hicke: Were you then carrying on those functions at the same time? 



314 



Owen: Yes, I did. So I had through the years gone back to Beirut. 

It's very seldom that a month went by that I didn't have to spend 
two or three days in Beirut. I always kept one or two lawyers 
there, American lawyers, outside of our local counsel, as well as 
The Hague . 



Saudi Government Railroad 



Hicke: Okay, let's move on to Dhahran, then. What did they want you to 
do there? 

Owen: Well, one thing, I love trains. Since I was a little boy, I grew 
up always close to railroad tracks for some reason, and I loved 
that, because I loved to wave at the engineers. My big objective 
in life was to be a railroad engineer when I was a small boy. 

So in the two years preceding my going to Saudi Arabia, 
Aramco had built the King a railroad. He wanted a railroad, the 
Saudi Government Railroad. So the first day I got there, Spike 
Spurlock, who was a Rhodes Scholar from PM&S [Pillsbury, Madison 
& Sutro] in San Francisco, who was my boss-- 



Hicke: George Ray was his boss-- 

Owen: Yes. Called me in and said, "Well, Bill, we've got a lot of 

things you can do here. We have six lawyers here with you now in 
Dhahran, and you, by the way, are the second in command. You 
take over every time I'm not around. But I've heard from remarks 
that you love railroads." 

I said, "Oh, I've always been a big railroad fan. I used to 
carry a railroad guide in the pocket of my car. I loved that." 

He said, "Well, then I think it would be good if I named you 
as general counsel of the Saudi Government Railroad." So that 
was really my most onerous duty at the time. We wanted to turn 
it over to the Saudi government as soon as we could, but we had 
to teach them how to operate it. [laughter] 

Hicke: Who built it? 

Owen: Aramco. 

Hicke: I mean they contracted? 



315 

Owen: Yes. We had some-- 

Hicke: Did Bechtel or somebody like that-- 

Owen: It wasn't Bechtel, but it was-- 

Hicke : Fluor? 

Owen: Fluor, Bechtel, but I think John Howard of England- -I've just 

forgotten. It was largely built by the time I got there, but no 
trains had arrived. So shortly after I got there, the first 
train was to run. It was a passenger train to go from Dammam 
Fort to Riyadh. It was quite a train. We bought old commuting 
cars from the New Haven Railroad in New York, and diesel engines, 
used, from the States. The track was all in place, and 
everything went beautifully until I was sitting in my office when 
the phone rang. 

It was Jim Gildea, formerly executive vice president of the 
Union Pacific who was President of the railroad. Jim said, "Say, 
Bill, we've got some trouble. Up here in Hofuf, the train ran 
into a camel and killed it. So the engineer's in jail." 
[laughter] 

Hicke: Somebody's valuable property, I guess! 

Owen: "And the train is stopped." "Oh," I said, "oh my Lord." So I 
got in touch with Tom Barger (in Government Relations, later 
chairman of the board) immediately and I said, "Look, let's go up 
to Hofuf and see what we can do." Tom was next to Garry Owen, 
the second in command of Government Relations at that time under 
Garry. 

Hicke: Garry Owen? 

Owen: Yes. And Garry was over in Jiddah, so Tom was first in command 
in Dhahran. 

So Tom and I went up, and we argued a little while, and it 
didn't do any good, but the local Amir was sorry, the Shariah was 
perfectly clear, that the striker is the one at fault, so our 
engineer has to be put in jail. 

Then Tom was able to get through to Riyadh. The king was 
livid. He told the amir to return the engineer to the train and 
not to do that again. 

Hicke: Not to the engineer, anyway! 



316 



Owen: Yes. [laughter] That's just a little anecdote about--. But the 
railroad proved to be a big success. We turned it over in about 
eight months from the time the first train ran, as a running, 
going proposition. 

Hicke: Who rode on it? 

Owen: Oh, there was a lot of traffic. Merchants, everyone who wanted 
to go to Riyadh rode on it, instead of riding their camels or 
their own trucks. And I took Bill Donovan on it when he was 
visiting in Saudi Arabia 

Hicke: I see, the Saudis, for the most part. 

Owen: Yes, the Saudis. So that was one of the things I did. 



Negotiations 



Owen: Then I did a lot of contracting work, and at that time in Aramco 
we had very heavy price negotiations going on which were handled 
by Spurlock and Bob Brougham- -Robert I. Brougham executive vice 
president- -and Fred Davies- -chairman of the board. That took a 
tremendous lot of Spike Spurlock' s time, so it left most of the 
day-to-day legal stuff in my hands. 

But in early 1954, I'd been there just a little more than 
three years at the time, I was chief counsel of the Middle East, 
so I was in The Hague. I was also the seretary of Aramco 
Overseas Company. They wanted a lawyer there in A.O.C. as 
secretary for a while until they got the thing running. So I 
took that job over. 

I was in The Hague when Spike cabled me to meet him at the 
plane in the middle of the night at the Schiphol Airport. He was 
on his way to New York. I got out there, and I said, "How are 
these negotiations going?" He said, "Well, I've really dulled my 
pick with them. I'm just disgusted. I just don't think I'm 
effective anymore with these guys." 

I said, "Look, Spike, everyone respects you. Of course 
you're effective." 

"Well, life just isn't that long. I'm not going to do it 
anymore. I told Fred that I wasn't coming back to the 
negotiations at the end of this vacation. So I want you to 
return immediately to Dhahran, send anyone you want to The Hague 



317 



to do what you were doing, resign as secretary of AOC, you've 
been there long enough. They're on their feet now. And take 
over these negotiations with Brougham and Davies . " 

Hicke: I have to interrupt here before you finish this --there was a 1950 
treaty? 

Owen: A 1950 agreement, December 30, 1950 agreement. 
Hicke: Were you involved in that at all? 

Owen: I was not. Wait a minute. Spike was mostly involved. I wasn't 
involved in any of the negotiations. I did some of the drafting, 
but that isn't to me involved. 

From that point on, after that agreement, I was the lawyer 
primarily involved in every negotiation, every agreement from 
that date on. That was the last one taken by someone else. 

Hicke: 1950. 

Owen: The 1950 agreement. 

Hicke: Okay. But you're just talking about '54 now? 

Owen: Well, yes. I've said we had heavy price negotiations, because 
the 1950 agreement provided for an income tax. We submitted to 
an income tax instead of just giving them a royalty. They were 
complaining about the prices that we were charging for oil, and 
wanted us to charge more, so they'd get more revenue. These were 
negotiations that went on for month after month and year after 
year, and they were the key thing to our existence and the 
existence of the Saudi government. They were important to both 
parties. 

Hicke: But then in '53, there was a relinquishment. Were you involved 
in that? 

Owen: Oh, yes, I was involved in that. 

Hicke: So we've got at least two things we need to discuss here. 

Owen: Well, the relinquishment agreement was- -the original concession 
provided that we would relinquish areas from time to time. I've 
forgotten just what it said. Spike turned that stuff over to me. 
I got Manley Hudson's assistant, Dick Young, who was a boundary 
expert and a good international lawyer, to come out as outside 
counsel and help me on that. And Dick Young primarily wrote the 
1953 relinquishment agreement. 



318 



Hicke: Why did you have to rewrite the relinquishment- -it was in the 
original concession- - 

Owen: Oh, yes. It was just implementing the original concession, 
implementing it. We agreed that from time to time, when we 
weren't using land that we had, we would relinquish. It was 
pretty vague, so we had to negotiate a little bit about it, but 
it was all within the framework of the convention. It was 
nothing that they sprung on us . 

Hicke: Okay, so then back to the pricing negotiation. 
Owen: And the pricing negotiation went on for a long time. 

Hicke: As you saw it, what were the major challenges for Aramco in this? 
The major ramifications? 

Owen: We were trying to make the best deal we could for the owner 

companies who owned us. We wanted to get volume discounts, that 
is, if we took more oil than we were scheduled to take, or if 
they all took more oil, we could sell it to them at a cheaper 
price, get a volume discount. You understand what that is? 

Hicke: Yes, sure. 

Owen: We also felt that we should be able to sell at some small margin 
less to our owner companies if they disposed of the oil 
themselves and didn't sell it to third parties, like Shell or 
other oil companies. All that kind of stuff. 

So then in that same era, and I'm talking '50s to 1960 now, 
we had the Sidon Price Claim come up, which was where the Saudi 
government felt that Aramco owed money on the oil that was 
transported through Tapline's thousand-mile pipeline to the 
Mediterranean, even though Tapline had paid its portion, and they 
wanted to double dip. We were really right in it, but we finally 
settled that. They were claiming $283 million, and we settled 
for $180 million on it, because of another thing. We had won the 
Onassis case, and- - 

Hicke : Do you want to go into that now? 

Owen: Well, I was going to go back. I'll come on the Onassis later. 

We had won that, and Faisal --then Crown Prince, later king-- 
who was our friend, was a little stung by that, and not very 
happy. That meant so much to us that we felt, "Okay, we're not 
going to push our point." We did take them to arbitration on the 
Sidon Price Claim, and Faisal got mad. He said, "You guys should 



319 



be able to settle this short of arbitration." So we 
negotiated- -we appointed our arbitrator and they appointed their 
arbitratorbut Faisal didn't want it to go ahead. He wanted us 
to settle it. So we were very generous in the settlement, and 
settled that, primarily because we felt we could, after we had 
upheld our rights to ship oil worldwide in the Onassis case. 

So much happened that it's awfully hard to get it all in. 

Hicke: And all of these things were, as you just pointed out, 
interrelated. 

Owen: They were all interrelated. But I'll go back a minute and give 
you an anecdote . 

I had the privilege of knowing Floyd Ohliger very, very 
well, a close friend, and then of knowing Fred Davies very well, 
and I always had the highest respect. He was one of the finest 
men I've ever known. And primarily because I worked with him day 
by day on these pricing things, which was a great break, I 
learned more from Fred than I learned from anybody possibly in my 
life. 

Hicke: What kinds of things did you learn? 

Owen: Keys to negotiating and so on. I'd done a lot of negotiating 
myself, but he was a past master at it. 

Hicke: Can you give me an example, or specific illustration? 

Owen: I don't think I can. I'll think of one later. But he was very 
smooth, polished, and very honest. He never said something and 
had to come back and say, "Well, I didn't quite mean that." 
That's one thing I learned from him: don't overstate at any 
point, because you lose face. But I knew him well. 

After three years in Dhahran, they developed a new section 
of town and built a house for Floyd Ohliger, and right next to it 
built a house for me because I had so many kids, I needed more 
bedrooms. So I was first Floyd's across-the-street neighbor, and 
then later I was his next-door neighbor. 

And I got to know Cy Hardy very well. That's Norman Hardy, 
who succeeded Fred Davies as chairman of the board. I don't know 
where the Cy comes from; everybody called him Cy. He signed his 
letters "N. Hardy." He was my next-door neighbor, and I got to 
know him and worked with him a great deal. I remember the day he 
retired. They had a luncheon for him in San Francisco. I went 



320 



Hicke: 
Owen: 



back from the luncheon, and I was in Jim O'Brien's office when 
the phone rang. 

It was Cy Hardy on the phone; he'd traced me up there. He 
said, "Bill, am I officially relieved of all my duties yet? It 
depends on whether it's Dhahran time that controls, or Pacific 
time that controls. What do you say?" I said, "What do you want 
to do, Cy? You want to get drunk?" He said, "I sure do." I 
said, "Go on and get drunk; we'll call it Dhahran time." 
[laughter] 

Great. I never thought about that time change! 

And then later, the Bargers moved into the Ohliger-Hardy place 
next to me, so I was next door to them, and of course, I'd been 
friends with Tom for a long time. So I had the unique pleasure 
of knowing all of these people very, very well. 



Leadership Styles of Early Company Officers 



Hicke: Could you just tell me briefly about the differences in their 

leadership style, and perhaps what impact that might have had on 
the company? 

Owen: Well, Fred Davies was very gentle in his manner, very quiet. Cy 
was bombastic but considerate. Barger was more of the 
professorial type. For instance, he was interested in all this 
stuff like New Math and so on that Brougham and I fought him on 
all the time. It doesn't mean we weren't friends, but we just 
didn't think our children were learning anything. But he was a 
scholar. And when he was chief executive officer, he'd make us 
read the damnedest economic reports you- -oh! Didn't have a thing 
to do with what we were doing, but thinking he could broaden our 
minds and arise them- -but Tom was a great guy. 

Hicke: You had to know how many dates were being produced in each oasis, 
or something? 

Owen: Tom was chief executive officer. Although Tom was never chairman 
of the board, he was president. We didn't have a chairman of the 
board for a while, because Brougham and Paul Arnot were running 
neck and neck, and the board couldn't choose among them, and they 
didn't want to make Barger the chairman and either Arnot or 
Brougham president, thereby passing the other. That's why we had 
a triumvirate. 



321 



Hicke: Well, Paul Arnot did become president, didn't he? 

Owen: No. Brougham became chairman of the board, after Barger left. 

Of all of these people, Brougham was the one I, from 1954 to 1969 
or '70, that I spent most of my time with. I was the closest to 
Brougham, although I was close to all these people. 1 was never 
close to Liston Hills. Liston wasn't chairman very long; he was 
in ill health. He'd had a heart attack, and he never did really 
take over. During that time, Frank Jungers sort of had to act 
both as chief executive officer and chief operating officer. But 
I worked very closely with Jungers. 

Hicke: You just talked about Barger 's leadership style, so then 
Brougham? 

Owen: Brougham was very positive, and he was well liked. He was 
positive, firm, and pretty rough, really. Jungers was more 
polished. He had a tremendous regard for the Saudis and bringing 
them into the picture. He got along beautifully with the Saudis. 
Even though Barger did, Brougham did, and I would say Jungers 
more than anyone else, because Jungers put his money where his 
mouth was . 

Hicke: Well, that was an interesting little comparison; you had a chance 
to observe so many of them. 

Owen: Yes. Well, we had a very good president in the fifties, Bob 
Keyes, Robert L. Keyes. He was the president when Davies was 
chairman. He was excellent. He was very easygoing. I would say 
that he was the least effective of all the ones I've talked 
about, but he's still a good man. I've talked about some pretty 
outstanding people. 

Hicke: I think they must have been, because when you think what Aramco 
has accomplished, I think the-- 

Owen: Yes. Arnot was outstanding. But I wouldn't rate him as highly 
as I would rate some of the others . 

Hicke: But they also got lots of other outstanding men and people to--. 

Owen: Yes. They had, for instance- -Aramco' s finance department in the 
fifties was like the Notre Dame football team. They had four or 
five replacements for every position. 

Hicke: Deep. 

Owen: They were strong, they were deep. The Law Department was always 
deep; we always kept it very, very deep, to the extent that the 



322 



owner companies, we'd train these lawyers, and they would come 
and raid me. [laughter] 

Hicke: Training for the owner companies? 

Owen: Yes. They'd just say, "Well, look, you've got Jack Curry who can 
do this job. Can't we have Don Marguardt?" I said, "Look, we've 
taken a long time to train Don now. But I'll admit, we are 
pretty deep here. You can have Marguardt if you'll give him 150 
percent of the salary he's getting now." 

Hicke: Oh, how nice. 

Owen: And Exxon did the same thing with Frank Mefferd, who was one of 

my outstanding lawyers. All these people spoke Arabic. Everyone 
except me; I was always too busy to learn it. But it was good 
that I didn't, because if I had spoken Arabic, I'd have gotten 
myself in all kinds of jams in negotiating. 

Hicke: How so? 

Owen: Well, because I wouldn't have had all the technical- -it would 
have been imprecise. Arabic is such a precise language. It 
takes years to really master it. As it was, we had to have an 
interpreter when Brougham and Davies and I were negotiating, and 
that gave me time to think, because I understood enough Arabic 
that I knew what was going on, and I had a little time to think 
before replying. And the same goes for Brougham and Davies. I 
say "I," because very often, we'd be in a legal discussion where 
I had the floor and was arguing with Yamani, who was at one time 
their legal advisor. 

Hicke: I suppose it works the other way, too. 
Owen : Oh , sure . 

Hicke: They had a chance to think because they could understand the 
English, but they insisted on the translation. 

Owen: Yes. 

Hicke: You said you have an anecdote? 

Owen: In early 1942, my ship, which was the U.S.S. Blackhawk. a 

destroyer tender, which I had joined in Australia after we fled 
to Australia when we didn't get sunk in that trap near Guam, we 
were in Tjilatijup, which is on the south coast of Java. The 
entire Japanese fleet, a number of carriers, a number of 
battleships, and a number of cruisers and destroyers, just a 



323 



tremendous fleet, was coming down, and all we had were a couple 
of divisions of destroyers, a handful of destroyers, and the 
light cruiser Marblehead. the heavy cruiser Houston, and we had 
the distinguished British cruisers Ajax and Achilles, which had 
incidentally been the ones who had hunted down and caused the 
Graf Spee to scuttle itself in Montevideo in 1939. 

We had the Australian flagship, their cruiser Canberra, and 
the Dutch cruiser De Ruyter. We had no battleships, no aircraft 
carriers. Of these ships I've named, the only heavy cruiser was 
the Houston. All the rest were light cruisers. And as I say, a 
handful of destroyers. 

So we decided to attack, to try to cut them off from 
Australia. A Dutch admiral was in command, and he ordered the 
fleet to just go out. It was a suicide mission. We lost most of 
our ships in the suicide mission. 

But in the meantime, on the day before the battle, before 
our ships were --our ships were leaving, and the Blackhawk. our 
ship, was going to be the last to leave, because we were support 
and not front line. So I ended up as shore patrol officer. I 
was trying to get refugees on the few ships. The Japs were 
overhead bombing us. We knew these would be the last ships that 
would get out of Indonesia. We wanted to be sure that we got as 
many Americans, British, Europeans, anybody off who wanted to get 
off that we could. 

So I was in charge of that as shore patrol officer. 
Finally, we got every merchant ship out just loaded to the gills. 
We had the Dutch passenger ship Tijalinka. which was supposed to 
carry about 1,500 passengers. And when I had 4,000 on it, I had 
to begin making some adjustments. So I had people. ... the 
refugees would come up, they'd have two or three bags, and I'd 
say, "You can only take one bag aboard, I am very sorry. There's 
hardly room to stand." 

I remember this very nice oil man coming up. He had two big 
bags. He'd come from Borneo; he'd been head of Socal-- 

ff 

Hicke: He'd been head of-- 

Owen: Standard of California's operations in Borneo. Really an 

engaging guy. He lumbered up with these two great big suitcases, 
and I said, "Sir, I'm very sorry, I'm going to have to toss one 
of them in the drink." 



324 



He said, "Well, I can see from how crowded it is up there, 
you've got to do something." I said, "So which one do you want 
to keep? You don't have time to repack it anyway, because this 
ship is sailing in five minutes." 

He said, "Eeny, meeny, miney, moe. This one. I don't know 
what's in either of them anyway, I just threw things in." So I 
threw the suitcase in the sea. 

I never expected to see that guy again, but when I showed up 
in Dhahran- -Peggy was still in the States, because our house 
wasn't quite ready--! was told that I was to be in a special 
guest house they'd set up for Mr. Hardy, and I was to live there 
with him until our wives came. Cy Hardy, to become president and 
chairman of the board. 

So I walked in. He looked at me, and he said, "Hey, I know 
you. " 

Hicke: Oh, no. 

Owen: I said, "Oh, boy. I'm afraid I know you." He began laughing and 
he said, "You're the goddamn naval lieutenant who threw my bag in 
the Indian Ocean, and now I've got to live with you!" He just 
roared. We had more fun over that! [laughter] I thought that 
was worth-- 



Hicke: That is definitely worth recording, 
houses? 



And you have a story on 



Owen: On houses. This is not really a story, it's just a little 
anecdote, of interest maybe to no one but me and to you. 

In the issue of Life magazine from May 1950, there were two 
lead articles. The entire Life magazine had practically nothing 
else in it except the opening of the Shamrock Hilton Hotel in 
Houston, Glen McCarthy, the wildcatter, who brought half of 
Hollywood here by private plane. You ever heard of that? And 
had a big bash. It was a feature of half the magazine. 

The other half of the magazine was American families in 
Saudi Arabia. It features one particular house. I told you this 
was May, 1950. I was still in Beirut. But the house that they 
featured was house 1124, which was then occupied by Fred and 
Jeanie Abbott. Incidentally, Fred Abbott lives right in the San 
Francisco area there. He was a vice president of the company. 
He has a long history. Jeanie died about six months ago. But 
they lived in House 1124. 



325 



It goes through the house, shows it off, and shows what nice 
living conditions the Americans had even then, in 1950. And 
that's the house that was assigned to Peggy and me when we were 
in town later. And that's the one that was right across from 
Floyd Ohliger's house. And then when they built the new section, 
they built a new home for the senior guy in command out there, 
Ohliger at the time, living out there, and they built one for me 
just because I had so damn many children. [laughs] So that's 
how all the housing comes to--. But I think you ought to get a 
copy of the May 1950- - 

Hicke: I'm sure I can find that. 

Owen: Yes, I'm sure you can find that. But it tells a lot about Aramco 
in those days. Life was a good magazine before they shortened 
it, ruined it. 

Hicke: I have a whole list of things here, I don't know where to start. 
We kind of left off with one of your small-world stories on Cy 
Hardy. 

Owen: Oh, yes. [laughs] 

Hicke: When did Tapline become part of Aramco? 

Owen: In 1964. 

Hicke: Well, that's way past the Onassis- -let' s go to the Onassis 
arbitration. 



Taoline Becomes a Subsidiary Company 



Owen: Well, first let's talk about Tapline, just for a minute. 
Hicke: All right, finish out Tapline. 

Owen: Yes, because I've given you all I'm going to give you on Tapline, 
Originally a very important part of the Aramco enterprise. But 
they originally did not make Tapline a subsidiary to Aramco 
because they wanted to insulate Aramco, have Aramco do business 
essentially no place but Saudi Arabia, so that if a company 
stepped on the toes of the Jordanian government, or the Syrian 
government, or the Lebanese government, Aramco wouldn't be 
blamed. It wasn't Aramco. 



326 



Well, by the early 1960s, it was obvious that that was 
costing us an awful lot of money, because we couldn't consolidate 
income tax returns . I began a campaign in ' 60 to try to persuade 
the directors --it took me four years to do it, but I was 
relentless, 1 kept talking to them each year about it, and showed 
them exactly how much money they were losing, and the fact that 
Tapline wasn't souring anybody's relationships at the time. It 
was running very smoothly, and I thought that the monetary 
advantages outweighed the relations advantage of insulation. 

So in 1964, we made Tapline a subsidiary of Aramco. That 
wasn't all welcome to all people, because an intense rivalry had 
grown up between the two companies, Tapline and Aramco. The Law 
Department was the only one in the middle , because we had Law 
Department both places, and when I went into Government 
Relations, I arranged that Government Relations would also be a 
common department- -that was in '58. 

So we had those common denominators. But management, 
Tapline management, Chandler, and Aramco management, principally 
Brougham, were always at each other's throats. And Barger, and 
so on. All of them perfectly nice guys, but very jealous of 
their territory, like my dog Tack. Chandler was very proud of 
running a wonderful pipeline operation. Barger -Brougham were 
very proud of running a very fine production operation. 

It got to the point where once Brougham and I were going 
through Beirut, going to New York or San Francisco, wherever, for 
meetings, and we cabled for Bill Chandler, if convenient, to meet 
us at the airport where we had a couple of things to discuss to 
coordinate between the two companies . 

Everything went fine until about six weeks later, when 
Brougham called me on the phone and he absolutely exploded. He 
said, "You won't believe this! You will not believe this, Bill! 
Can you come down to my office?" I said, "Sure." 

Went to Brougham's office, and there he had an invoice from 
Tapline for the two beers, one each, that Brougham and I had in 
the airport. Chandler had a beer too, but he didn't charge 
Aramco for that, charged himself. Brougham was furious, and so 
Brougham then found out how much accounting effort that had been, 
and found out that it cost $98.33 to send that charge over to 
Aramco from Tapline, and sent it all back to Chandler with a hot 
note saying what a chintzy thing it was to do. [laughs] 

I said to Brougham, "Bob, how much did it cost for you to go 
into this thing and do all that you did and have the accountants 
find it cost $98.33?" He said, "Well, I hadn't done that yet." 



327 



I said, "You better, before you hear from Chandler!" [laughter] 
Both wonderful people, but that's the kind of thing. There was a 
rivalry. 

It seemed like the lawyers were always in the middle, 
because I, as general counsel of both companies--! was Bill 
Chandler's general counsel, 1 was Bob Brougham's, I had a foot in 
both camps. They'd get into arguments, they'd come to me to 
settle it, and oh! Impossible situation. 

At any rate, it wasn't until about five or six years after 
they were consolidated that they were really running very 
smoothly together. There had been personal resentments and 
little things. I just gave an example of the kind of thing. But 
that's the story of Tapline. 

Hicke: Do you suppose that also, though, made for good operations? 

Owen: It sure did. Oh! 

Hicke: I mean, these people that were so proud of their own operations. 

Owen: Oh, it sure did make for good operations. But it made for a lot 
of personal- - 

Hicke: So that's the other side of that-- 

Owen: Yes, a lot of personal tension at any rate. 

Hicke: Especially for you. Well, one more thing on Tapline. What kind 
of challenges did you have in dealing with the shareholder 
companies on the part of Tapline? 

Owen: The shareholders were primarily interested in Aramco. They knew 
that Tapline was necessary to Aramco, but it wasn't their 
fair-haired boy. Aramco was. So a lot of favoritism was shown 
when employees would be assigned to one company or the other from 
the shareholders, and that kind of thing. Aramco always came out 
a little better than Tapline. 

All of this changed when John Kelberer came out to Aramco as 
a vice president of Aramco. 

Hicke: About when was that? 

Owen: That was in 1972, I believe. Tapline was beautifully operated. 
They had the best crew of pipeline operators, started by Bert 
Hull of the Big Inch, Little Inch, people who took pride in their 
work, real craftsmen. 



328 



Hicke: Wasn't there also- -this is a separate problem, and I guess it 
would come under relations with the government, but deciding 
whether Tapline began at Abqaiq or--? 

Owen: Oh, that wasn't a problem with the Government; the Saudis didn't 
care. Because it would make no difference in the fees we paid to 
the Saudi government. It was just a question of where we wanted 
it to begin, where we wanted title to be changed, or when we 
wanted the shareholders to take over responsibility. We finally 
decided that we wanted to take over responsibility within our 
operating fields, and that's why it began at Qaisumah later, 
although it's supposed to be Abqaiq, Qaisumah is a couple of 
hundred miles west. So that's the reason for that. 



Boundary Disputes 



Hicke: Chief counsel, Middle East, 1951 to '56, and there's a lot 

happening in there. We might have covered some of it. One thing 
we didn't cover was a boundary arbitration over the-- 

Owen: Oh, over Yemen. 
Hicke: Yes. 

Owen: Well, we had a lot of boundary disputes. We were on the Saudis' 
side, because when they claimed territory, why, it accrued to our 
advantage. Their disputes were with the British who were running 
Abu Dhabi, running Aden, and we had some rather nasty incidents. 
At one point, the British went into some disputed territory where 
we had an exploration party and a lot of equipment down in Aden. 
The British were there with a Major Ellis and claimed that we 
were in British territory, that this was part of Aden, not Saudi 
Arabia. They had these armed personnel carriers, and they 
trained the guns on our people and said, "You have until sundown 
to get out with all your equipment." 

Our exploration people got on the radio to Tom Barger, who 
was running Relations there at the time. Garry Owen was in the 
States. Tom got in touch with me, and we called down there, and 
I did the talking. I talked with Major Ellis. I said, "This is 
obviously an honest dispute. I can assure you that our people 
think they're in Saudi Arabia. You think they're in Aden. It 
doesn't speak well for the relations between the U.S. and Britain 
for you to come in and train guns on American citizens and give 
them until sundown to get out." 



329 



Well, he stuck to his guns. By God, they had to. I said, 
"Okay. If you persist in that attitude, we are holding you, the 
British government, and the Queen of England responsible for all 
injuries to personnel or loss of equipment or damage." And hung 
up. 

We got out, and that was a very hot subject. And of course, 
the Saudi government wrote one hell of a note to the British, and 
they backed down. 

But in the meantime, we had our equipment down there, and it 
rusted away. It took long enough diplomatically to settle it, 
but we had a lot of things like that with the British, 
boundaries. Now, our boundary expert was my friend Richard 
Young. Every time we got in a boundary dispute, we'd call him 
out there . 

The next most important boundary dispute was with Abu Dhabi. 
Where did Abu Dhabi end and Saudi Arabia begin? It's that 
simple. 

Hicke: But nobody really knew, did they? 

Owen: Well, they all had their theories. But the British were adamant, 
and I must say the Saudis were adamant. And if the two had sat 
down- -this was before any oil had been discovered there. We 
didn't know whether there was oil or not. And that's the time to 
settle something, because if you discover oil, then it's harder. 

Hicke: You've got a real problem. 
Owen: You've got a real problem, yes. 

So finally, Aramco persuaded the Saudis and the British to 
go into a boundary arbitration and abide by the outcome. 

Hicke: Do you know what year we're in? 

Owen: We're in 1953. Dick Young was appointed lead counsel for the 

Saudi government, and a couple of our Relations people that were 
pretty knowledgeable about boundary matters were always in the 
back room to give him factual information and so on. The 
arbitration seemed to be going fairly smoothly, until the British 
yelled foul at one point, thinking that false evidence had been 
produced. 

I can't believe that's true, because I can't believe that 
Dick Young wouldn't have known about it. He wouldn't have 
tolerated it to begin with, but wouldn't have known about it. 



330 



But they had a pretty slick Saudi, Yusef Yussim, who was running 
the thing from the Saudi side. I can't be sure he didn't do a 
couple of dirty tricks. The British may have been right, we 
never knew. 

So that left the subject up in the air. And later, in the 
late fifties, early sixties, they signed an agreement. The 
Saudis and Abu Dhabi got together and agreed- -again, before oil 
had been found. Right after that, oil was found, and it turned 
out to be to Abu Dhabi's benefit, which is fine, because they 
were a small country, they could use the oil a lot more than 
Saudi Arabia. 

The other boundary dispute was offshore between Bahrain and 
Saudi Arabia. 

Hicke: I didn't know about that one. 

Owen: Yes, and for that, again, Dick Young came out. On that one, they 
negotiated a settlement. The Saudis leaned over backwards to 
give Bahrain everything it wanted, because they were very 
friendly with Bahrain and always have been sort of a big brother 
to Bahrain. They gave up anything the Bahrainis really wanted, 
which is interesting, because you wouldn't expect that of the 
Saudis, when you're dealing with money. 

Hicke: No. I knew they had good relations with Kuwait because of 'Abd 
al-'Aziz. 

Owen: As a matter of fact, the relations are so good that when I left 
Saudi Arabia last week, my son and daughter drove me over a four 
or five mile causeway connecting the island of Bahrain and Saudi 
Arabia, beautiful four -lane superhighway, and they put me on the 
plane in Bahrain. 

Hicke: You flew out of Bahrain? 

Owen: I flew out of Bahrain. The Saudis were perfectly happy about it. 

Hicke: Who built the causeway? 

Owen: The two of them split it. And another thing, have you ever heard 
of the A-B Pipeline? That's the Aramco- Bahrain Pipeline. 
Bahrain Oil Company, BAPCO, which was owned by Socal, didn't 
produce enough oil to feed its refinery, so they needed Aramco 
oil. So by agreement of the Bahrain government and the Saudi 
government, way back in the 1950s- -I can't remember just when; 
early 1950s --they built an underwater pipeline together on which 
they shared the cost, and then the operating expenses, and Saudi 



331 



Arabia supplied Bahrain with all the oil it needed for its 
refinery. 

Hicke: That's amazing. 
Owen: Yes. 

Hicke: It's too bad there aren't more stories like that around the 
Middle East. 



Aristotle Onassis 

Hicke: Are we up to Onassis yet? 

Owen: Onassis is very simple. 

Hicke: Jim O'Brien called him a "beady- eyed Greek shipper." [laughter] 

Owen: Well, I'll tell something; in the course of my dissertation on 
this, I'm going to relate one incident you'll probably want to 
remove from the tape, but I think it was so funny. It involved 
Davies , Brougham, and me. 

But what happened was in 1953, we knew Aristotle Onassis had 
been in Saudi Arabia at least once; it turned out later he'd been 
there many times. Everybody in the world sort of distrusted 
Aristotle Onassis, and we wondered what he was up to and how it 
could affect us, but we didn't have much input into it, and 
waited back to see. 

Well, my boss, George Ray, was on a boat between San 
Francisco and Hong Kong. He and his wife Bonnie were taking a 
long vacation on a boat, and he did not want to be disturbed for 
anything. He said, "Bill, it's all up to you" --out there. Spike 
was in New York. He did the same thing to Spike in New York. 

Well, Fred Davies came running into my office this 
particular morning, and he slammed down a letter in Arabic with 
its translation on top. "What do you think of this, Bill?" It 
was a one -sentence letter from the Saudi government saying that 
as of--and the date was the day before- -"As of this day, Ulysses 
Aristotle Onassis, or Aristotle Ulysses--" 

Hicke: Aristotle Socrates. 



332 



Owen: "Aristotle Socrates Onassis has the exclusive rights to ship all 
Aramco oil that is extracted by Aramco or any other company from 
Saudi Arabia to any place in the world." 

I gulped a little bit. I thought it was a little beyond my 
capability to do much about it. Fred said, "Can they do this?" 
I said, "You mean legally?" Fred said, "Well, first legally." I 
said, "No, they can't do this legally. We've got this right in 
our Concession. It's one of the implied rights in all of this 
tabulation of rights we have, it leaves nothing out. We have the 
right to do this." 

Hicke: It wasn't spelled out, though, it was implied? 

Owen: It was implied. But it was a pretty clear implication. 

Fred said, "Well, we've got to answer this right away and 
say that we're not complying with it. You write the letter." So 
I wrote a letter, polite letter, telling them we just received 
this, there must be some misunderstanding because they did not 
have this right to give to Mr. Onassis. And therefore, it was in 
violation of our Concession, and therefore we would continue to 
operate as we had in the past. 

That took about an hour, that whole thing. Fred said, 
"Well, you think you ought to let George know about this? He 
didn't want you to bother him." I said, "Look, when something 
like this comes up, I don't care what he said. We're going to 
cable that ship. I know we can't get a code cable in there, but 
I'll take a chance. I'll cable him." 

So I cabled him, and then I code cabled Spurlock in New 
York, my counterpart there, and said, "This has happened." So, 
Ray continued on his cruise, cabling Spurlock to return 
immediately to Dhahran and work with Owen on this thing. Oh, 
work with Gowen and Wowen- -they referred to us in cables as 
Gowen, that's Garry Owen, and Wowen, William Owen--work with 
Gowen and Wowen. 

So Spurlock came back, and there wasn't much we could do 
then except make some recommendations to George. So George 
showed up in a couple of weeks . 

In the meantime, we hadn't heard from the Saudi Government, 
or we'd have had to act, after our stern letter that we weren't 
paying any attention, and we didn't pay any attention. We just 
kept on. So George came there and he said, "Well, one of the 
options you give me is the option of arbitration. Of course we 
have the right to go to arbitration. The Concession says so. 



333 



Well, the first thing we have to do- -and I hope they don't go do 
anything foolish- -we' ve got to line up some very strong counsel 
that have to spend several years on this thing." 

So we lined up Lowell Uadmond of White & Case in New York, 
who was one of the foremost trial lawyers in the U.S. He took 
over, came out. So he and Ray and Davies met with the Saudi 
government on trying to smooth the arbitration and get an 
arbitration agreement, while at the same time Brougham and I and 
Garry Owen were working on the pricing issues. 



Hicke: You and Gowen were working on the prices? 

Owen: Yes. So it was an exciting time, because we had negotiations 

going on morning, afternoon, and night on two different problems. 
The third thing, one of our top lawyers out there, Jack Curry, 
who was my successor as general counsel, was working on a customs 
problem, our customs exemptions with another group. So we had 
three negotiating groups in Jiddah at the same time. 

The Onassis group- -Wadmond, Ray- -well, they were negotiating 
with Surur and the Crown Prince. 

Hicke: Surur? 

Owen: Surur, [spells], Mohammed Surur, who was the minister of finance. 
The Ministry of Finance took charge of all oil matters in those 
days. 

Hicke: That was before the days of Ahmad Zaki Yamani? 

Owen: Before the days of Abdullah Tariki and Ahmad Zaki Yamani. 

Hicke: Before Tariki? 

Owen: Yes. Well, I shouldn't say before the days- -before Tariki took 
power. Tariki was working- - 

Hicke: But there was no Oil Ministry. 

Owen: No, no Oil Ministry, that's all I meant. Tariki was there, and 
took an active part in that. 

So then the other group of us, on the price problem that 
persisted for so many years, would be dealing again with Surur, 
and Tariki would be backing up Surur and Said Sami, who was sort 
of a high-level flunky in the Saudi government. And then Jack 



334 



Curry would come in and his gang, that was a lower level group. 
There were no conflicts there; it took them a couple of weeks to 
resolve their negotiations, their problem. 

Finally, after weeks or several months, Ray and Vadmond got 
the arbitration agreement signed. (Took Broughham and I a lot 
longer to get the price problems done . ) They were done in a 
series of agreements, which I'll tell you about later. And so 
they decided that arbitration would be in Geneva, Switzerland. 

Ve appointed as our arbitrator Saba Habachy, the former 
minister of national economy of Egypt during World War II, a law 
professor and without any question the outstanding Egyptian 
jurist of his time. Now, we had used him on boundary matters 
before, but by our rules of the game- -and they've changed since 
the Onassis arbitration. Generally, all arbitration, arbitrators 
are required to be impartial now. They were not at that time. 
We were allowed to appoint anyone we wanted, even though it was 
someone who represented us in other matters and would plead our 
cause inside the tribunal, and so was the Saudi government. 

So we both appointed very partial arbitrators, and the two 
of them got together and appointed Dr. Georges Sauser-Hall, the 
Dean of the Law School at Geneva, Switzerland, and one of the 
foremost international legal experts in the world, as the 
chairman of the Tribunal, that is, the third arbitrator. 

I was talking just last week to the Dhahran Law Department 
about how stupid a system it is where you have partial 
arbitrators. It just adds another layer of counsel, and you 
really end up with just one arbitrator to settle it. It just 
adds to the expense and delay, and it makes no sense. But at any 
rate, that was the system in those days. 

These days, if you appoint an arbitrator, he's got to be 
impartial, and you don't even touch him. You don't make a 
telephone call to him. You have no communication with him. In 
those days, we were able to talk with Saba daily. [laughs] The 
Saudi -Arab government, which was really Onassis and his staff, 
because in the Onassis -Saudi -Arab agreement, the Saudi-Arabs were 
smart enough to have inserted a clause that "this agreement is 
null and void if it is proven that Aramco has prior rights." So 
they kept themselves off the hook. 

Hicke: They also had some suspicion that it might be a problem. 

Owen: Right. It went on for about three years. We had a staff in 
Geneva: White & Case in addition to Lowell Wadmond, Olivir 
Marsden out there, who later became president of the American Bar 



335 



Association. They sent Hal Fales, who later became head of White 
& Case. They sent Steven Schwabel, who is now the U.S. judge on 
the International Court of Justice in The Hague. We had all 
kinds of power. We hadLord, I'll think of his name pretty 
soon, the premier British international lawyer of his day. And 
we had a Belgian legal expert, and we had interpreters, because 
this was in three languages: Arabic, French, and English. It 
was a big production. I can't tell you how many millions of 
dollars it cost to do this thing. 

But our general counsel, George Ray, thought and rightly 
so- -that this was the most important thing. So he not only took 
himself, he took Spurlock out of New York and kept Spurlock with 
him in Geneva all the time, and left the law department to be run 
by me both places- -well , and in Beirut, and in The Hague- - 

Hicke: Tapline, and Aramco Services- 
Owen: Yes, and all the rest. 
Hicke: [laughs] Too bad you had nothing to do while you were there! 

Owen: Oh, well. But it was exciting. If you want to know something 
about the arbitration, nobody knows more about it than I do. I 
would have to come to Geneva every two weeks to be briefed on how 
far they had gotten, during the course of which I became great 
friends with Steve Schwabel, who plays very heavily, with Dick 
Young, whom I've mentioned before, in the Aminoil arbitration 
with Kuwait in which I was lead counsel some years later. 

So actually, Steve came to Houston last year to make a 
speech, and he called me, and we went out and had lunch together. 
We've been friends all these years. He later, before he became 
the U.S. -appointed judge on the International Court of Justice, 
he was the legal advisor to the State Department. That was his 
position while I was in the Aminoil -Kuwait arbitration, and he 
was very helpful in that. 

Hicke: Well, the shareholder companies had their legal departments 
working on it too. 

Owen: Oh, absolutely! Oh! They had their legal departments. Jim 

O'Brien (of Socal) did I can't tell you how many hours of work. 

Hicke: Probably all the other three-- 

Owen: And all the other three. And I was writing memoranda to George 
all the time, acting as liaison, getting their input into George 
in Geneva, and Lowell. 



336 



Hicke: Well, it brings up another question. I believe that the 

arbitration was based on the law of Saudi Arabia, wasn't it? The 
Koran and the Shariah? Tell me about that part. 

Owen: Well, it's a little confused. The tribunal tried to be 

confusing. What we wanted them to say was that it was based on 
the law- -see, the arbitration clause does not say what law 
governs- - 

Hicke: In the agreement? 

Owen: The arbitration clause in the agreement at that time does not 

say, which is an omission that I hope nobody has made since. It 
doesn't give you any guidance. So we wanted them to say that it 
was the law of Saudi Arabia, so long as it was consistent with 
the general principles of international law. The Saudis wanted 
them to say that it was the Saudi-Arab law, period. That was the 
issue. You can read it as siding with us, or you can read it as 
siding with them. We won, so I give up; that's to the scholars 
of the future to look at and decide what they really meant. I 
don't think anybody will ever know what they meant(But now it is 
pretty well settled by the Award in my Aminoil) . 

Hicke: But meanwhile, you really had to be fully cognizant of what the 
law was in Saudi Arabia, all of your years. 

Owen: Oh, sure. All of us had to. 

Hicke: So you had to make a full study of all of that? 

Owen: Yes. As I say, I was on the fringes of that arbitration. I was 
kept up on it all the time, but it was Ray, Spurlock, and Wadmond 
who were the primary people. 

Hicke: And what happened after the arbitrators made their decision? Was 
that a big day? 

Owen: Well, that was a big day, because it was Sauser-Hall and Habachy 
agreed, and the Saudi arbitrator, he concurred except as to, and 
some language there -- 

Hicke: Saved his face a little? 

Owen: Saved his face a little bit, but really he didn't violently 

dissent. You can read it as a dissent, but it really wasn't a 
very strong dissent at all. So at any rate, it and the Aminoil 
versus Kuwait arbitration are generally recognized as the two 
most important private international arbitrations of this 
century. 



337 



Other Arbitration 

Hicke: Shall we go to that one, then? 
Owen: Oh, no, that's after I retired. 
Hicke: Oh, it is? Oh, that's right, okay. 

Owen: We may not have to go into that at all, but I can tell you about 
it. 

Hicke: Oh, I see. Was that based on the principles established in this 
one? 

Owen: Well, it was certainly based on a lot of the arguments that we 

had made on participation, and that the owner companies had sort 
of rejected. 

I represented Aminoil as their lead counsel in an 
arbitration with the Kuwait government. It was Aminoil (American 
Independent Oil Company), not Aramco. 

Hicke: You've done so many things; I can't keep track of them all. 

Owen: After I retired, they kept me on retainer, and the first thing 

that happened was I took four months on a freighter going around 
the world, which I mentioned, and got very well rested. I 
thought, "Hey, this retirement's great; I don't think I'll ever 
work any more." And well, I got a little bored in a few months. 
Therefore, I was not unhappy when I was summoned to meet with the 
Executive Committee of Aramco. They were concerned about the 
anti-boycott activities, the anti-boycott statutes. How we could 
comply with them and still operate, and so on. 

So, with the consent of Jack Curry, my successor, Jungers 
appointed me in charge of this whole problem. They called me the 
Czar of Anti-boycott. They couldn't purchase anything except in 
accordance with guidelines which I would recommend and which 
management would generally approve. I had to approve every 
contract in the U.S., so we didn't get in trouble. 

So I did that for- -I promised to do that for a year. Well, 
it ended up a year and three months. But as I was coming to the 
end of that, I was approached by the American Independent Oil 
Company, which had not knuckled under to the government's demands 



338 



for participation (part ownership) in the various oil companies 
around the world. The way all the other oil companies had. It 
was alone. It said [to Kuwait], "You have no right to take our 
property without fair compensation. So we're not going to sign 
any agreements with you, we protest it." The Kuwaitis kicked 
them out , and they came to me . I took the case . 

I lined up Dick Young, I lined up Pierre Lalive, who is now 
the dean of the International Law School at Geneva, who was the 
secretary general in the Onassis arbitration, I met him there. I 
lined up Jean Flavien Lalive, who was a graduate student in the 
Harvard Law School in my third year there, whom I knew. I had 
the backing of a major New York firm, and I had a staff of about 
twenty people there. That took about three years, but went --and 
Aminoil was a small oil company- -by a unanimous decision. 
Aminoil was granted an award of $180 million plus. So we won. 
I've got the whole record of the case right in here, in this 
library. But I just thought I'd give you that as an aside. 

Hicke: That kind of finishes up the arbitration. 

Owen: No, it sort of ties a little bit into some of the other--. From 
that point on, I've done practically nothing but international 
arbitrations. 

Hicke: Well, some day I'd like to hear all that, too. 
Owen: Including several for Aramco. 

Hicke: Oh, well we should eventually talk about those. Shall we do that 
now? 

Owen: No, let's get back into the main part. 

Hicke: Let's get back into the fifties or wherever we were. 

[consulting notes] Well, maybe this is a good time for you 
to tell me- -well, no, let's go into Government Relations. 

Owen: I think you have enough on Onassis now. 

Hicke: Yes, I think so too. 

Owen: I capsuled that, but-- 

Hicke: Yes, obviously. 



339 



Owen: Because the testimony was voluminous. Experts agreeing, 

disagreeing, and shipping practices and all came into it, but I 
gave you the guts of It. 

Okay, you want to go into what? 

Hicke: Well, do you think we've covered your period up to 1958 when you 
became head of Government Relations? 

Owen: No, we haven't covered Aramco Overseas Company. 
Hicke: Oh, yes. Okay. Let's do that. 



Aramco Overseas Company 



Owen: In 1949 --there may have been some problem before, in 1948 --but in 
1949, it became obvious that it was going to be quite a problem 
for Aramco- -I wasn't in Dhahran yet at the time- -the fact that 
the people who wanted our oil had to pay for it in soft currency. 
That is, French francs, English pounds, German marks, Greek 
drachmas , whatever . 

Hicke: Not convertible at the time, I guess. 

Owen: Not convertible at the time. So we had to figure a way to eat up 
that soft currency, to pay our expenses in it. We had been using 
the New York office of Aramco, which was originally the San 
Francisco office but had been moved to New York in 1947, we had 
been using that for recruiting, for engineering support from the 
States, for the negotiation of major contracts, for purchasing, 
public relations. But about 1950, we moved the public relations 
part down to Washington. That was a part of Aramco too, Aramco 's 
Washington off ice- -that's all they did, public relations. 

So we had to get a solution to this problem. We had more 
dollars going out than were coming in, and what we were getting 
was funny money, in those days. 

Hicke: That you couldn't spend anywhere. 

Owen: That we couldn't spend. I didn't mean that disrespectfully, 

funny money, but it was money that- -we've teased about it that 
way. Funny money, what do we do with this funny money? So Les 
Snyder, a v.p. of Aramco, was the one who conceived the idea of, 
"Look, I'm an engineering specialist, and I know that we can get 
as good engineering support in Europe as we can in the United 



340 



States. So let's set up a company that will do that." Our 
people in purchasing said, "Well, there's no reason why we can't 
buy rice from Australia, or machine parts from Switzerland, and 
all the rest. Let's do that." 

Since we wanted to get rid of soft currency, "We can hire 
some Italian employees, bring them out, some Dutch employees, 
some British employees." So we set up Aramco Overseas Company to 
do those kinds of things, services to Aramco. It was our service 
organization, just like Aramco Service Company here in Houston. 
We still have Aramco Overseas Company, which is Saudi Aramco 's 
service organization for Europe, but for different areas- -Aramco 
Service company for U.S. activities, Aramco Overseas company for 
non-U.S. activities. 

Hicke: Where is that based? 

Owen: In Leiden. It had been in The Hague, but it's been moved to 
Leiden. Traditionally, it was in The Hague. 

So we first set that up in Rome with representatives in The 
Hague and London, and then we decided that The Hague was a better 
place to have the headquarters, so we moved from Rome within 
about three months, Rome to The Hague, and had sub -off ices in 
Rome and in London, and in Tokyo, then in Sydney. 

Hicke: You said this got going in about '48? 

Owen: Well, no, I said there was a problem beginning to appear in '48. 
In '49, we tackled it. But we didn't do anything. We actually 
filed some of the corporate documents, but we hadn't gotten very 
far. Les Snyder was unhappy with the progress we were making, 
that we were proceeding like a snail, he said, and that's when he 
went to George Ray and he said he wanted me to be the secretary 
to help get this thing moving. He was their chief executive 
officer. 

A little aside on that, George Ray was of the old school. 
He didn't believe that a lawyer should wear two hats. He thought 
a lawyer should be a lawyer and nothing else, that it diluted his 
attention to law if he were also an operator of any kind. 

Hicke: On the board or--? 

Owen: Yes. Nevertheless, Les persuaded him they needed me. So he 
said, "Okay. But Bill, as long as he's with AOC, and you 
promised you'd just keep him a little while, as long as he 
is- -his office will still be in Dhahran--he will be legal counsel 



341 



to Aramco and Tapline, but he mustn't touch the legal aspects of 
any AOC matter," which was a little hard to sort out. 

Hicke: Yes, I can see that! 

Owen: So I wasn't allowed to do that. But I stayed with AOC long 
enough to know a great deal about it. 

But we solved our soft currency problem. We were able to 
eat up the soft currency. 

Hicke: How long did that take, to establish the balance? 

Owen: Well, it was several years to really solve the problem 

completely, but we got it solved completely. And it's no problem 
these days; hasn't been for a number of years. Now, AOC and ASC 
operate on their merits, not for currency purposes, but because a 
big producing company like Aramco, which produced about 200,000 
barrels of oil a day, or 150,000 in '47, and a million in '56 and 
ten million in '74, we needed support, as we still do. 

Oh, well I didn't mention- -oh, yes, AOC always had a Beirut 
office, and that's where Shafiq Kombargi comes in. He was head 
of AOC's Beirut office within a year or so after it was 
established. Stu Campbell, an American, was the first. 

Hicke: Where did Shafiq come from? 

Owen: He came from Palestine. He was a Palestinian refugee. 

Hicke: And living in- -how did you find him? 

Owen: Well, I don't know how our recruiting people found him. The 
Tapline recruiting people found him. He was obviously a very 
gifted person. He stayed- -he did nothing but AOC work for some 
years. Well, here he is, coming to see us. 

Hicke: Appropriately. 

Owen: Yes, I'm going to step up and ask him if he would- -Hi, Shafiq! 
Shafiq Kombargi: I hope I'm not interrupting you. [tape interruption] 
[Interview 2: May 8, 1993 ]## 

Hicke: Let's see. Yesterday we got about up to the point where you 
became the head of Government Relations, and you had just 
finished talking about how the overseas company had gotten 
started, and where Shafiq Kombargi came in, and then he came in. 



342 



Owen: Yes, he did. He was telling you primarily almost exclusively of 
the AOC office in Beirut and what they did, in the Middle East. 
Now, AOC had offices originally in Rome, London, and The Hague, 
those being the European offices, and in Tokyo, because we were 
buying a lot of pipe from the Japanese, pipe and other things, 
and the Japanese would take soft currency, which helped; and 
Australia, because we found that the food products we had to 
import- -we had to import food products not only for Aramco, but 
also some for the local market. Because the Saudis didn't have 
enough for their people in Saudi Arabia. We did not want to 
diminish the local supply, so we imported everything up to a 
certain time. Later, through our al-Kharj project, the farming 
agriculture project, and other projects, they'd gotten not only 
self-sufficient food-wise, but in a position to do some 
exporting. 

Hicke: I didn't realize there was exporting. 
Owen: Yes. 



Agricultural Prelects 



Hicke: Were you involved with the Saudi employees noon day feeding 
program or anything like that? 

Owen: Well, from 1954 I was a member of the Executive Management 
Council of Aramco, which included all the top officers. It 
changed its name a couple of times, but no matter, it was the 
same organization. Through this, I was involved in our treatment 
of the Saudis and our programs for the Saudis. In E.M.C., which 
had to make recommendations to the chief executive officer, we 
had to review every program. And you did your homework in 
Aramco, or you didn't last long. 

Hicke: So you certainly knew about all the things that were going on. 

Owen: I knew about all of the things. I wasn't a sponsor of any of the 
programs. I think the most interesting program- -well, we had a 
lot of interesting programs. We just mentioned the agricultural 
projects, which we call al-Kharj, because that was the center of 
where we showed them how to irrigate the land, brought in cattle, 
showed them how to plant, and in general helped them to be in 
position to produce their own food. 

Hicke: You showed them how to produce a certain kind of food, not their 
entire diet? 



343 



Owen: Yes. Not their entire diet. 

But in Australia- -that was a good source for rice, the kind 
of rice the Saudis liked, the long- grained- -there was not enough 
long- grained rice available. So Aramco Overseas Company office 
in Sydney sent several shiploads of rice, complete shiploads -- 
18,000, 20,000 tons of rice each shipload- -out to Saudi Arabia 
over a period of years until we began to be able to get it from 
closer places. I don't thinkthe Saudis eat lots of rice--I 
don't think any rice is produced in Saudi Arabia, but I don't 
know that. I wouldn't think so. 

Hicke: It requires so much water. 

Owen: It requires so much water and swampland, and the only water they 
have is in the mountains really, so I don't think they do. 

Hicke: How did they acquire a taste for it? They had always imported 
it? 

Owen: They had always imported it, I guess. Their merchants would get 
it, the ships would come in, and they would trade rice for sheep 
or other things that they had over the centuries, I suppose. 

But that's what the AOC office in Tokyo primarily purchased 
and shipped to Arabia: food items. Australian beef is great. 
It cost about one-half of what, when you consider the 
transportation and the customs and all this, what U.S. beef cost. 
Argentinean beef, which is excellent, which we had part of the 
time, was almost as expensive as U.S. beef. And besides, the 
housewives liked the Australian beef best, which is the main 
factor, main reason. So we imported rice and beef from 
Australia, lots of canned fruits, like pineapples, which would be 
produced in the South Pacific islands and canned in Australia. 

I remember, I'd make a trip to Sydney a couple of times a 
year, and the office was so anxious to please the American tastes 
in Dhahran that they would ask me if I please wouldn't have any 
breakfast before I came to the office, and then they'd blindfold 
me, and they'd have me try this kind of canned pineapple, this 
kind of canned pineapple, or this kind of something else, and so 
on. And then before we'd go out to lunch, they would say, "Look, 
will you just take a few bites of a couple of things before we go 
to lunch?" And I would test the different foods they'd put in 
front of me . 

Hicke: Was that in your job description? 



344 



Owen: It wasn't In my job description [laughter], it was a lot of fun. 
But that office has been discontinued now. They just don't need 
it; it was discontinued some time in the seventies, I've 
forgotten just when. They still have the Japanese office. 
They've discontinued the London and Rome, and everything is 
centered in Leiden now, instead of The Hague. Leiden is just a 
few miles, let me say ten to fifteen kilometers, from The Hague. 

And the only reason to go there was that our lease ran out 
in The Hague . We had a very good building in The Hague , but it 
was in demand by others, and we really didn't need anything quite 
that elaborate any longer. So we found something that suited our 
tastes in Leiden. That's where AOC is now, its European office. 

So as Shafiq told you yesterday, Tapline and AOC, after 
Tapline became a subsidiary of Aramco, like AOC, combined in 
Beirut, and Shafiq went over as the general manager in charge of 
administration for what became Tapline. AOC's Beirut office was 
gobbled up by Tapline. And since then, the Beirut office in 
these fifteen years, sixteen, seventeen, since September, 1975, 
Beirut has been a mess. We tried to continue for a while keeping 
an office, but we had to give up. 

Hicke: Even Tapline? 
Owen: Even Tapline. 



Need for Tapline Declines 



Owen: And incidentally, the need for the pipeline eventually 

disappeared with the opening of the Suez Canal to tanker traffic. 

Hicke: Oh, why don't we just wind that story up, since you mentioned it? 

Owen: Well, when the Suez Canal was widened, it meant that the large 
tankers, which were the only economical tankers we had, and the 
supertankers could go through the canal . When I was in Egypt 
just a couple of weeks ago, I was informed that they're in a 
continual process of widening and deepening the canal to fit any 
ships or any new developments in shipping. 

With that, Tapline became less useful. 
Hicke : About when did that happen? 

Owen: I would say- -well, we continued shipping oil through Tapline 

until the line was blown up a few times in Syria and in Lebanon 



345 



and so on in the early ' 70s . But we would repair and keep on 
going. But throughput went down, and it had long ago paid for 
itself. Tapline, as a practical matter, went out of existence. 
Now, if the pipeline is used at all- -and this is something you'd 
have to ask Jim Knight--it's only to ship oil to the Zerka 
Refinery in Jordan for local needs. 

Syria, their refinery doesn't need it because they're fed by 
IPC, which is at Tripoli, which is far north of the Tapline 
pipeline route. I believe we're still supplying whatever 
feedstock they need for the Zerka Refinery in Jordan. 

Hicke: Okay. But it was no longer efficient to ship to Europe or 
anywhere farther? 

Owen: If there hadn't been all the political problems and the 

disruptions, it would have possibly broken even with going 
through the canal with supertankers up to 1980 or '85, but as of 
now, the cost factor would be in favor of the tankers, and it 
would be economically unfeasible. Its usefulness would be in 
case of disruption of the Suez Canal, or in case of global 
conflict where it was important to get oil no matter how much it 
cost, that would mean 475,000 more barrels more per day from 
Saudi Arabia to get to the Mediterranean. 

Hicke: So it's still kept ready for use? 

Owen: As I understand it- -you'd have to ask someone else, like Don 

Fate, about this --but as I understand it, it's sort of mothballed 

in a half -efficient way. It isn't ready to go, but it could 
possibly be put back in operation. 

Hicke: Do you think that we've covered AOC? 

Owen: I think we've covered AOC sufficiently. And let me, since we're 
on the service organization: Aramco originally, as I said 
yesterday, relied on the San Francisco and then the New York 
office in the early days, in the forties, for support in 
recruiting, engineering, and purchasing, and public relations, 
although public relations later went down to Washington. Very 
early in the game it went down to Washington. And the role of 
the New York office diminished with AOC, Aramco Overseas Company, 
because we did a relatively smaller portion of our purchasing and 
engineering in the United States. Now, it was still substantial, 
but we were able to reduce the New York staff of the New York 
office by at least two -thirds over the years, up until 1974. 



346 
Aramco Realty Corporation 



Owen: I should also say, in addition, we had another subsidiary, an 
Aramco subsidiary, which was Aramco Realty Corporation in New 
York, which held the lease on Aramco offices and which owned a 
house in Scarsdale where the Aramco representative in the so- 
called "Study Group," a group of promising younger people from 
the owner companiesthe bird dogs, we called them; they always, 
each of them appointed one of their top people, because this was 
one of their biggest interests in the world. For instance, from 
Texaco, we've had Jim Kinnear for a short time, we've had Al de 
Crane for a long time--Al is now chairman of Texaco, as you know; 
Jim Kinnear was chief executive officer until he recently 
resigned. Socal, we had George Parkhurst, Jones McQuinn, George 
Keller. So these were not lightweights. Mobil, we had Raleigh 
Warner, Henry Moses--no, I take that back. Henry Moses was a 
director of Aramco, he wasn't a bird dog. 

But they would meet regularly in New York, and we always 
sent one of our climbing young stars from Aramco, gave them two- 
and three-year assignments in New York, to chair these meetings. 

Hicke: I think Brock Powers -- 

Owen: Brock Powers was one, John Kelberer was another. Let me see. 
No, Frank didn't ever have that opportunity; he was too busy 
elsewhere. 1 But Brock did, and John Kelberer. I'm trying to 
think of who--Hal Foglequist, who has since retired, who was 
Frank Jungers ' roommate in college, University of Washington. 

So we provided a house for those people. We always had a 
representative there in Scarsdale. That's how Aramco Realty 
Company operated; it was really nothing but a little corporate 
shell. It had a board of directors of two or three, you know, 
and it didn't do anything important, just holding a lease and 
renting a house. [laughs] And nothing to do more than that. 



Moving the Offices to Texas 



Owen: But in '72, the New York state tax authorities got very tough on 
the franchise tax, and they wanted to tax Aramco for all of its 
worldwide profit, a goodly percentage-- 



'Frank Jungers was first chairman of the Study Group and first to live 
in the Scarsdale House. He was followed by George F. Larsen. 



347 



Owen: Unitary system, just like California has, which has a lot to do 
with the fact that Aramco hasn't done more in California than it 
has done . 

Hicke: And other corporations also, I think. 

Owen: Yes. California has hurt itself in that way, by being too 
greedy, and so has New York. 

So I went to Ralph Sproule , who was my chief tax counsel . 
In '73 and '74, we took two trips to Albany and talked with the 
tax authorities. I told then flatly that "Here we are with a 
little bit of activity, support activity here, hiring people, 
hiring lots of your New York residents as teachers," because they 
had a good educational system, "and buying, giving you that 
economic activity, and you're going to just ruin it if you keep 
this up. Now, there's a way that you can interpret this statute. 
It doesn't have to be interpreted to require unitary taxation." 

They wouldn't even listen; they weren't interested. They 
didn't think we were going to move, because they knew that- -I 
think they thought that Exxon and Mobil and Texaco would see that 
we didn't. 

Well, actually unbeknownst for a while at least to the 
Executive Committee members, the owner company people, Jungers 
had confronted me with the problem, and he directed that we would 
make a study as to where Aramco could possibly move, which would 
have the least tax exposure. Actually, I contacted outside 
counsel in fifty states. I got their opinions -- 

Hicke: You didn't try hard for Alaska, probably. [laughs] 

Owen: Yes. Alaska wasn't very desirable, but if we were doing it, I 

wanted to do the whole thing, compare everything. Because Alaska 
might have had a theory or something that worried us. Somebody 
else might take a--. So after this process took me, say, three 
months to get answers- -these were all eminent counsel in each of 
these states. At the end of 1973, I went to Jungers. I think it 
was in November. I said, "Well, tax-wise, the three best states 
in the Union for us are Texas, Missouri, or Louisiana. 
California's obviously out, because they are like New York. 
Others are out for other reasons . " 

And then Jungers said, "Well, then we will bring in a couple 
of other people in this, oil people, and find out where we can 
get the biggest support in those three states." I rated them 
fairly equally. 



348 



Hicke: Tax-wise. 

Owen: Yes. 

Hicke: Or, financially? 

Owen: Financially too. And our people unanimously cane up with- -well, 
really the only thing they had in Missouri was Black and Vetch, 
which did a lot of work for Aramco Service Company, and all the 
other people were going in there. Missouri didn't compare in 
attractiveness to the operating people to being closer to the 
people they wanted to deal with in Louisiana and Texas. 

Louisiana had some appeal to them, but in the final 
analysis, they recommended to Jungers that if we were to move 
from New York, let's move to Texas. 

Well, then the question was, to Dallas or Houston? Both 
good oil centers, with a lot to say for them. But there was no 
support activity in Houston. And so Jungers had softened the 
Executive Committee informally before the April 1974 board 
meetings. We had complained about this, and I'd talked to the 
Executive Committee a couple of times about the impossibility of 
the tax situation in New York. So they were ready to hear this, 
but we really sprung it on them at the April 1974 meetings. 

Jungers said, "I certainly recommend, as chief executive 
officer of Aramco, that we move to Houston from New York." Well, 
boy! As I say, they'd been softened up, but gee! 

Hicke: These are the shareholder companies? 

Owen: The shareholders would say--. I remember Howard Page of Exxon, 
he said, "Yeah, but what about the possibility of an income tax 
in Texas?" I said, "Well, no one can guarantee the course of 
legislation in any state, but I've asked my tax advisors, tax 
counsel in Texas, and they tell me that Texans are against an 
income tax state." Now, this is '74. 

Hicke: Are you talking about corporate income tax or personal? 

Owen: Corporate income tax and personal. But they were against all 

income tax. They want property taxes and other excise taxes and 
sales taxes and so on, but not corporate income tax. They see no 
chance in the world. It has been proposed, and it is proposed 
every couple of years that Texas have an income tax. It's been 
proposed since- -and I had the date- -1954 every year, but it 
hasn't gotten to first base. Our tax counsel thinks in the 
foreseeable future, it has no chance getting to first base. 



349 



Then, I said gratuitously, we chose Texas. That was one of 
the reasons. And although I've rated them tax-wise, financially, 
on their current taxes, equally between Missouri, Texas, and 
Louisiana, in my opinion there's less chance for an income tax in 
Texas than in either of those other two states, although I'm not 
saying the other two are going to pass one. 

So they, after much debate, I guess this was the end of 
April of 1974, they approved. Jungers sent me right from San 
Francisco to Dallas, where our tax advisors were the firm of 
George E. Ray. You remember when he called me yesterday? 

Hicke: Yes, that Ray. 

Owen: That Ray. Firm was Ray, Trotti, Hemphill, and- -one other name, 
I've forgotten, they've changed the name since, but at any rate, 
it doesn't matter. 

At any rate, so I got in touch with Ralph Sproule, my chief 
tax counsel in New York, and I asked him to take the first plane 
to Dallas and meet me there. We met with the Ray firm, and they 
were able to get us a reception by the top Texas tax authority. 
They listened to all we had to say. I told them what our problem 
was in New York, and we were considering moving to Texas, and 
that we understood the following to be true, from the opinions of 
our counsel here: that we would be subject to this, and we'd be 
subject to that, we'd be subject to such-and-such, and we 
wouldn't be subject to something else, and all the rest of it. 

They were most receptive, and their attitude was, "We'd love 
to have Aramco in Texas. What can we do to help?" Well, I was 
expecting--! said, "Well, one thing- -you gentlemen have been very 
forthright in telling us all of this. But I've got to have it in 
writing, because I've got to report to my chairman of the board 
of directors." 

They said, "No problem. We'll be glad to give you 
everything we've said today, we'll give you in writing." I had 
visions, oh, my Lord, six months. How long will it take? So I 
said, "Well, how long do you think it will take?" "Well, it 
might take us several days or a week to write this up, but why 
don't you write it up and send it in the form of a letter to us 
that this is what you understood that we told you, and then 
you'll cover all the points that you want to cover?" 

Hicke: Oh, excellent. 

Owen: I said, "Well, we'll be glad to do that." 



350 



Owen: "We'll be glad to do that. Can you give me any idea, because I 
think we'd like, once we've made this decision, and if I 
understand this correctly, we've made the decision, we want to 
start moving on this. How long would it take for us to get your 
response?" 

So the chairman of this Texas tax group said, "Well, if you 
get it into us any morning at 9:00, we can either approve or 
disapprove it by 3:00 in the afternoon." I said, "How about 
tomorrow?" He said, "Well, that's fine." This is 5:00 in the 
afternoon, so we went back to Dallas, stayed up all night writing 
this letter. We sent Bob Trotti, who was George's second in 
command in this firm, back. He took the first Southwest Airlines 
plane to Austin the next morning, and took our letter. He was 
back, back in Dallas, by 2:00 in the afternoon with it signed, 
where they had approved and signed it. 

Hicke: I bet you were feeling like you did the right thing. 

Owen: So we surprised Joe Johnston, who was in charge of the U.S. 

operations in New York, with that. Joe said, "Well, okay. If 
they want to move, they want to move fast." I said, "Yeah, Joe, 
the New York franchise tax this year as I figure it is going to 
run us about $35 million, proportionately on the number of weeks 
we're there. So the fastest you can get us out of New York to 
Texas, the better." 

So immediately, the announcement was made. By this time, it 
was the first week in May. In a week or two, Joe had offered all 
New York office employees employment in Texas. Many came. I 
believe- -well, of all of the managers, 90 percent came. Even of 
slightly lower level personnel, a majority came. So what Joe did 
is he sent them all down, and he contacted a couple of real 
estate agents down here and said, "Look, I want you to help these 
people. We're going to be moving down there, and we understand 
that you're very reputable. Therefore, the following people will 
contact you." They could contact anybody they wanted in 
addition, but the company was giving them suggestions. They 
didn't know who to contact. 

And they were to come down to see if they would like living 
here, check into the schools, where they might want to live, what 
the prices were, land and all of that. And we of course assisted 
them in moving and getting rid of their homes in New York, New 
Jersey, Connecticut, and got them down there. 



351 



By July 1, we had- -I believe It's fair to say 60 percent of 
the New York office here. 

Hicke: That's Impressive. 

Owen: By the middle of August, no office In New York. 

Hicke: Up and running here? 

Owen: Up and running here. Right after I left Dallas--! didn't cover 

this- -when I got In touch with Johnston, and he got in touch with 
Jungers. Jungers sent Ed Bowen, Edward T. Bowen, I told you I 
wanted you to talk to him sometime --he's rough and tough- -who was 
then president of Aramco Overseas Company in The Hague --or had he 
resigned from that six months before? No, he still was; he'd 
gone on vacation and Don Wasson had just replaced him. No, Ed 
Bowen was in The Hague at the time as the president of AOC. 

So Jungers sent him over here with me to come down to 
Houston and select an office. 

This was within a week of the San Francisco board meetings. 
Hicke: That's amazing. 

Owen: So Ed came down, and we looked around, and we originally decided 
on a particular location. Then we found that there might be some 
problems with that. 

So finally, Ed and I decided on 1100 Milam, which Is 
downtown. We rented, it's a large building, adjacent by a 
walkway over the street to the Hyatt Regency Hotel there, a prime 
location. We were able to get either five or six, I believe it 
was six, floors. So we moved in the office there and began the 
recruiting of Texans. We were so busy at that time by the gas 
program (in Saudi Arabia) and of all the support work they 
needed, engineering support work, that we had to expand the staff 
greatly, double, triple it. So that's why we've got so many 
Texans now in the organization here. [laughter] And so on, who 
filtered out there. 

But we were off and running, and as we expanded, it wasn't 
big enough. There was no more space available there. So we 
later bought these two buildings here, one of which is not 
occupied right now. 

Hicke: We're at 9009 West-- 



352 



Owen: 9009 West Loop South. 

Hicke: I had been wondering how and why everybody was in Texas, so I'm 
glad I know now. 

Owen: Well, that's the full story. 

Hicke: Of course, it's an advantage for the individual, too, not to have 
a personal income tax. 

Owen: Well, that's absolutely right. And as a matter of fact, as 

people have retired who were from the New York office and had 
roots up there, they have not returned there. They preferred to 
stay in Texas. 

Hicke: Plus a lot of people from-- 
Owen: Ninety percent of them, at least. 
Hicke: --Arabia have retired here. 



Aramcons 



Owen: Yes. Now, this is interesting. Aramco was originally a Socal 
company. Ninety percent of the expatriates are- -even more than 
that; I'll go so far as to say 95 percent of the 
expatriates- -were from California in 1950. Barger was a notable 
exception, I was a notable exception. 

Hicke: The early ones. 

Owen: The early ones. And this was true in the early days, and they 

had the good positions in Aramco. As Texaco moved in, they began 
wanting equal treatment, very properly, but it took a while for 
that to occur. So when I first joined Aramco in '47, everything 
was Socal. Bill Chandler, Harry Hall, Fred Davies, and Les 
Snyder-- 

Hicke: Spurlock? 

Owen: Spurlock, Goodyear, another lawyer from PM&S , and--. But in the 
early fifties, you began to see --well, I'll give you an example. 
The big day in Dhahran--like in the Navy or the Armed Forces, the 
real big day, the Game, is the Army-Navy game. Every year, there 
were parties on the Big Game [day]. That's Stanford [University] 



353 



and [University of] California [at Berkeley] . We had almost 
equal representation from the two schools. 

Hicke: You mean this was a big deal in Dhahran? 

Owen: It was the biggest social weekend of the year. 

Hicke: Oh, my word, that is interesting! 

Owen: The Big Game in California. 

Hicke: That's very illustrative, too. 

Owen: Yes. And that was true for the first few years I was there. 

Then, little by little, you began to get people from the 
Midwest and New York who had been Texaco affiliated in their 
management . 

Hicke: Couldn't care less about the Big Game, probably. 

Owen: Couldn't care less is right. [laughter] So that sort of fell by 
the wayside, but that was--. And then, so really the key 
personnel up to the 1960s were principally Socal and Texaco, and 
then we got into loan programs and so on, and little by little, 
inevitably, Exxon and Mobil, we had former Exxon and Mobil 
employees here who were transferred from their companies into 
Aramco as Aramco would need them. 

Hicke: But also, I think a lot of people were recruited just for Aramco 
and were only company- - 

Owen: Oh, look, I was recruited solely for Aramco. Tom Barger was 

recruited solely for Aramco. We were about the only two, though, 
up until 1950, I think. 

Hicke: Oh, is that right? Somebody told me that-- 
Owen: Yes. 

Hicke: --it was George Rentz who went around, or maybe it was his idea, 
and then he followed through, to go around interviewing people 
and make sure that they were hired not from the shareholder 
companies but from scratch. 

Owen: Well, yes. But that was successful up to a degree. We did begin 
getting a lot of unaffiliated personnel. Of all the people we've 
talked about, okay, talking about the chief executive officers, 
W. F. Moore, Texaco; F. A. Davies, Socal; Cy Hardy, Socal; Bob 



354 



Keyes, who was president under both Davies and Cy, Texaco; and 
then Tom Barger, independent; Frank Jungers, independent; Liston 
Hill, Socal--he was in there between; I mentioned Bob Brougham, 
Exxon. So there was a heavy preponderance of people with prior 
affiliations with one of the owner companies. 

Hicke: In the top management. 

Owen: In the top management. And I think we did a pretty good job in 
the lower echelons in getting people completely independent of 
any owner company affiliation, which I considered very important. 
I know from the time I came in the Law Department, I was offered 
lawyers by the owner companies, and didn't take any of them. 
Every lawyer I hired was from the outside. 

Hicke: That was your policy? 

Owen: That was my policy. And I had another policy: I tried to get a 
geographical distribution. I didn't want them all from New York, 
I didn't want them all from California, I wanted some Midwest, 
some South, some- -I wanted a geographical mix in there, which I 
thought was important. Also, they had Franklin Bates and me from 
Harvard, and Douglas Erskine from Harvard, and then they had 
several from Hastings [College of Law] , and Harvard and Hastings 
seemed to have more unequal representation in the Law Department. 

So I began getting them from other schools. And even before 
we'd made our decision to move to Texas, when I came back on an 
interviewing trip at one time, wanting two really good lawyers, I 
went to Austin after I had been to Boalt Hall, Hastings, 
Stanford, Duke [University], I went to Texas, and I found two 
that I thought would fit in better than anyplace else. I didn't 
even want two from Texas . I had no idea at that time we were 
going to move here. I didn't want two from the same state, but 
they were both, I thought, outstanding from all these schools. 

So I tried to keep some kind of diversity, and I think 
that's true of many of the managers there. That's an irrelevant 
aside, but-- 

Hicke: No, it isn't. I think that's important because there are so many 
things that are unique about Aramco, and all these little things 
just help to make up the picture. I think that's sort of 
typical . 

I would like to ask you to tell me a little bit about Joe 
Johnston. You mentioned him. 



355 



Owen: Right. Joe Johnston was an engineer, and he had been with one or 
more aircraft companies . His love was airplanes , and he was 
hired by Aramco after they'd moved to New York. He was a very 
promising young executive. 

He had one handicap, which was certainly unfortunate. That 
was that his wife, Genevieve, was in ill health and could not 
stand the climate of Saudi Arabia. So that limited Joe's 
potential. I say this because Joe might well have been a chief 
executive officer along the way. He was that good. 

So he started as assistant to Joe McDonald, who was the vice 
president and secretary of Aramco. When Joe McDonald retired, 
Joe Johnston took over. Everybody called him "JJJ," because his 
name is Joseph J. Johnston. So he took over as secretary. 

Well, he continued in that position for many years, but he 
was more than a secretary, because he was really a liaison with 
the owner companies. He was our bridge here in the States. 
Anything- -oh, eventually he was given the title of vice president 
and made a Director and so on, and then became a senior vice 
president. 

But he had a great deal to do with the smoothness of our 
relations with the owner companies. He was a very, very strong 
executive. 

Hicke: How long was he with the company? 

Owen: Well, he was with the company, I imagine he came- -I can't 

remember whether he was there in '47; I don't think he was yet 
there in '47. I think he came in '48 or '49, and he retired--! 
retired in '75 at sixty, because we were required to retire at 
sixty for tax reasons. Do you know what they are? 

Hicke: No. 

Owen: If they had kept anybody after sixty out there, we'd have 

jeopardized our whole tax deductions for all employees in Arabia. 
So we never kept anyone over sixty. They changed that, Internal 
Revenue [Service] changed that-- 

Hicke: You're talking about the SAG [Saudi Arabian Government]? 

Owen: No, I'm talking about the IRS. We couldn't afford to do that. 
And so we had to retire at sixty or we'd jeopardize Aramcon IRS 
status . 

Hicke: I didn't know that. 



356 



Owen: But in the States, you could go until sixty- five. 

So Joe, I guess- -I'd guess Joe is my age, within a few 
months, certainly within a year- -but he stayed on into the early 
eighties, when he had to retire. But by that time- -maybe he went 
on another year or two after sixty- five --by that time, the rules 
had changed in 1976, all that was off. If 1 had been a year 
younger, I would have served another five years as general 
counsel. I'm glad I didn't, because I had so much fun in that 
five years in the other things I did that I'd never have had a 
chance to do otherwise. 

Hicke: But you wouldn't have voluntarily retired. 
Owen: No, I enjoyed my job too much. 



Corporate Structure 



Hicke: Okay, what about the corporate structure? You said you wanted to 
talk about that. 

Owen: Well, in 1950, we agreed to put Saudis on the board. So we 

always had Saudi representation on the board, at least two, from 
that point on. Now, they couldn't be expected to act impartially 
on company matters, and in the company interest, if it had to do 
with negotiations and deals with the Saudi government, because 
they were officials of the Saudi government. 

So we had two committees: the Executive Committee, and the 
Committee on Agreements and Negotiations. 

Hicke: And that's the one-- 

Owen: ANCOM, and the other is EXCOM. I believe it was 1959 when we 
changed our bylaws and even our certificate and went to that. 

Hicke: When these two committees were formed? 

Owen: When these two committees were formed. We'd always had an EXCOM, 
as all Delaware corporations had. This was, by the way, new to 
Delaware corporations. They did this while I was in Government 
Relations- - 

Hicke: Which is ANCOM you're talking about? 



357 



Owen: ANCOM, that made this corporate change. But I'd been told, there 
were talks with our Delaware counsel, and he said, "Well, the 
Delaware law doesn't say you can do it. On the other hand, it 
doesn't say you can't do it. Well, let's do it. See where it 
is." Well, it was accepted by Delaware, and after a year or two, 
that was it. 

So we started a new- -we contributed to the liberalization of 
Delaware corporate law in that respect. 

Yes. Did other corporations follow suit? 
Some corporations did, yes. 

Because probably not too many- -but maybe more and more of them 
were dealing with overseas governments, and had the same kind of 
problem. You pioneered. 

Yes. So that solved our problem. The ANCOM was the same as 
EXCOM except it didn't have any Saudi representative on it. Our 
EXCOM had a Saudi representative on it. 

What was the Saudi response? 

They understood. We were dealing with Yamani in those days, and 
Abdullah Tariki. Yamani was basically a lawyer. He had his 
degree from the University of Cairo, and then Master's at 
Harvard, and a Master's in tax at NYU. So he understood. We 
never had any trouble on the ANCOM thing. We never had a bit of 
bad feedback from the Saudi government. Of course, Faisal was 
king, and he was very favorable to Aramco. 

The other thing was that we had a system of incentive 
dividends whereby- -let me just explain it very simply- -there was 
a price advantage, slight though it might be, to any one of the 
four owners who lifted more than his percentage share of 
ownership. And that was a special dividend or an incentive 
dividend, we called it. 

Hicke: It was an incentive to sell more oil? 

Owen: Incentive to sell more oil. It was in Saudi Arabia's interest. 

But this was so complex, and the only person who ever 
understood it was Doug Erskine, and I'm not sure --all he did was 
he would illustrate it by having a bunch of pencils, and he'd 
sometimes run out of pencils in trying to explain it and get 
himself all confused. But I think he really understood. 



Hicke: 

Owen: 

Hicke: 

Owen: 

Hicke: 
Owen: 



358 



Hicke: All the posted pricing, and the-- 

Owen: Oh, yes, it was a mess, well. I'm teasing there, of course. I 

couldn't explain it right now. At one time I understood it, when 
I had to deal with it. 

Hicke: Well, we don't have to do it now, anyway. 
Owen: We don't have to deal with that. 

But it made it important that we declare dividends every 
month rather than every quarter, as most corporations do, or 
semi -annually, or annually as European and British corporations 
sometimes do. It was too much of a hassle to get the whole board 
together every month. So we'd go to Delaware counsel and say, 
"Can the Executive Committee declare dividends instead of the 
board, because they're to represent the board and act in place of 
the board when the board is not in session?" 

Well, this was a very experienced Delaware corporate lawyer, 
Anderson, who had a great sense of humor. I just loved him, and 
I had to have a lot of dealing with him. Every time I'd walk 
into his office, he'd say, "Now what new changes do you want to 
make in the Delaware law?" [laughter] 

So on this, he said- -and not to me, because this was before 
my time; I had other changes I had to make later- -but he told 
George Ray, "You know, George, it's never been done before that I 
know of, and I've had a little experience in this field. But I 
can't find anything in the Delaware law that says it can't be 
done. It certainly doesn't say it can be done. Let's try it, 
and if no one objects for a year or two, it's established." 

Hicke: He must have spent a lot of time scratching his head! [laughter] 

Owen: He once said we were his most difficult, complicated client. But 
just on the corporate setup, one time, one of the companies was 
very anxious to get alternate members of the board, so they 
didn't always have to send George Parkhurst or Howard Page, but 
could- -and that was a little too much for me. I said, "Oh, no, 
you can't do that." I found a couple of cases somewhere, or some 
of my lawyers did, which indicated that you couldn't do it, but 
nothing right on point. But I said, "No, that's going too far." 

"Well, will you get in touch with this Delaware counsel on 
this and see if you can't convince him?" I said, "I don't know 
why I should convince him, because two of you want it and two of 
you don't. But I will put it up to him and see what he says." I 



359 



called him from San Francisco at one of our board meetings and I 
said, "Can we have alternate directors?" 

He thought for a little while and he said, "Bill, Bill, 
you've pushed me as far as I can go. That is one thing the 
Delaware courts will never allow!" So 1 turned around and I told 
them in the board room. I said, "Gentlemen, he says this is one 
thing the Delaware courts will never allow. There is your 
answer. You can't do it. You've got to inconvenience Howard 
Page and George Parkhurst and Henry Moses and so on. Every time 
there's a board meeting, they've got to attend, or else you're 
not represented." 

At the same time, they wanted to have alternate Executive 
Committee meetings, let the alternate director also be the 
representative of that company on the Executive Committee and 
ANCOM. It all fell when they couldn't have alternate directors, 
because then you couldn't do anything. But that was a little 
aside; I'm getting into some real points of law here. 

Hicke: Well, that's really interesting. I'm going to change the tape 
here, and then maybe we should move on to Government Relations. 

Owen : Okay . 



Government Relations Department^/ 

Hicke: Okay, you became head of Government Relations in '58, was it? 

Owen: Yes. In July or August, '58, at the same time Garry Owen went 

back to Washington. He was a company vice president in charge of 
the Washington office. He had been head of Government Relations 
in Saudi Arabia up to that time. Tom Barger had been moved to 
Operations, and Management was not entirely satisfied with the 
Government Relations Organization. So Fred Davies, our chairman 
and Bob Brougham asked me to resign as associate general counsel 
and take over G.O. I first refused, but, on being assured that 
this would not preclude my succeeding George Ray as general 
counsel but would actually make me better qualified, I agreed. 

I took a look at the organization and I thought, well, we've 
done pretty well in the past with the Saudi government. 
Everything that our predecessors have done seems to have worked. 
So I want to be hesitant to tinker, but I certainly think we have 
some outstanding people in this organization that have been 
useful and are being lost. And I told you yesterday, that's when 



360 



I started- -within a month after I was in, I started a Policy and 
Planning Staff, which became very important to Aramco and the 
owner companies. We took all the problems on that staff, 
interviewed Law and interviewed Operations, and then we'd try to 
bring everything together. 

We had just the man to do it: John Pendleton, with Jim 
Knight, who was very strong, and George Rentz, who was very 
strong in academics but not always completely practical, but he 
was very useful. You don't always want- -you want people who can 
see beyond the practicalities of things, and George was very 
useful. The only thing we used to worry about is he didn't- -he 
was so honest, he would never have cheated anyone out of a 
nickel. But he wanted to go on these exotic trips, and I'd 
authorize them. He'd come back, and send his expense account up 
to me. All it would say would be, "Trip to Blank, dates dates," 
and an amount . 

I'd call George and say, "George, you can't do this now. 
We're in a corporation. You've got to give me a little back-up, 
you've got to give me your hotel bills. For major expenses, 
you've got to give me some kind of receipt." "Well," George 
said, "that takes more time than it's worth, Bill. Don't you 
guys trust me?" 

I said, "Of course we trust you, George, but the accountants 
don't necessarily." [laughter] He couldn't understand this. 
This happened a couple of times. I went- -I didn't bother John 
Pendleton. He was reportable to John, but I had to approve- -John 
would send the expense reports to me. He would send Rentz 's on 
with a large question with a "P" under it, bucked up to me, and 
so I didn't bother him, I went right to Barger. 

Barger said, "Oh, okay. Try to bring him in line, but I'll 
approve it this time." 

Hicke: No kidding! 

Owen: But finally, we had to bring him in line, because he made a trip 
to Moscow to attend some international convention there, and in 
connection with that he had some stops to make in other Arab 
countries, so he had quite an expense account when he got back. 
All he had to back it up was his Moscow hotel bill, no other 
hotel bills, nothing else. He was real proud of himself. He 
thought he was really playing ball with the corporation. 

So on this one I didn't want to go back to Barger. I said, 
"Look, John, he's your problem on expense reports. Why don't you 
talk to him?" John said, "I have, and I will. But he'll 



361 

probably end up in your lap tomorrow," and sure enough, he did. 
He just couldn't understand how unreasonable we were, wanting all 
this detail! 

I said, "Okay. Now, George, this is it. We are not going 
to put up with this any more. I don't want you to lose any 
money. I should just disallow part of this, except I know it's 
honest, I know it's right. But you can't do that any longer. My 
signature isn't good enough to get through the accountants. I've 
got to go again to Tom Barger, and I've had to do that twice 
before on your accounts. I'm not going to do it again. If you 
want to face Tom Barger and come in- -don't make your expense 
report out to me, make it out to Barger and go up and fight it 
out with him. " 

Well, from that point on, he was a little more reasonable. 
They were never perfect, but I could always get them by after 
that point. That's why I say he wasn't very practical. He was a 
great guy. Did you ever know him? 

Hicke: No. What were the major functions or challenges of the Policy 
and Planning Staff? What were you trying to accomplish? 

Owen: Every problem that the company had, requests from the government, 
negotiations, the stance we should take in negotiations, they 
even got into price negotiations, what our alternatives were and 
analyzed those problems- -they contributed a great deal. 

Hicke: Didn't that drop in price occur in early '60, or '61? 
Owen: Sixty-one there was a drop in price, yes. 

Hicke: A deliberate drop by the oil companies, Exxon or somebody 
started? 

Owen: Yes, I'm trying to think of the details on that. 

Hicke: Anyway, it ended up in OPEC. 

Owen: Oh, yes. It resulted in the formation of OPEC. 

Hicke: Were you involved in that in this Government Relations time? 

Owen: Oh, yes, absolutely. And that thing was part of the price 

negotiation stuff we had had for years, and it's just when we 
unilaterally changed the price downward that we knew we were in 
trouble. We hadn't been able to make agreements. Brougham and I 
and Davies--and Spurlock before me, about a year before me --had 
been on this for six years, just as intensively as some of the 



362 



things you saw when I showed you chronologies . Things happened 
every day on that. 

So it wasn't just because of that; that was what triggered 
it. They were unhappy with the fact that the price and their 
income was controlled solely by the owner companies, and they had 
no place in it. 

Hicke: By the oil companies. 

Owen: I mean by the oil companies, yes. 

Hicke: Oh, that's interesting, okay, so it was the whole thing- - 

Owen: The whole ball of wax on pricing. And it was just this drop in 
price from- -I've forgotten what it was --$2. 10 to $1.80 or 
something a barrel, I forget the numbers there. Just part of the 
whole thing. I'd have to look through a lot of notes to find out 
just what that exact price- -because there were price increases 
and, from time to time, very small price decreases. This was a 
big one. 

Hicke: But it was a lack of control, what you're sayinp , that really was 
the major factor. 

Owen: Lack of control, yes. And Brougham and I felt the government had 
a point. The owner companies didn't. 

Hicke: Now, that's another interesting thing, where the company was in 
between the shareholders and the government. 

Owen: Yes. We were very often in a difficult position. 

I remember one time that, on these price negotiations, this 
was in '56, and we got some cables. They were always addressed, 
never to Davies, because he didn't want- -he would be with us all 
the time, but they were addressed to Brougham and Owen. "Well, 
tell them this and tell them that." 

Hicke: The government? 

Owen: The government. And we looked back into the record, and we had 
told them exactly the same things they wanted time and time 
again. 

So I remember Brougham got furious. He cabled back- -and he 
wasn't very diplomatic when he was mad- -"We have told them these 
things many times. Now you come out and tell them." And so they 
came out. And do you know, we got in a meeting-- 



363 



Hlcke: Who is "they?" 

Owen: They, it was George Parkhurst, Socal; Howard Page of Exxon--still 
Jersey then--; Segal of Mobil, who was then on the board of 
Mobil; and Harvey Cash of Texaco. We got into this meeting with 
Yamani--no, it was with Surur and Tariki at the time- -we got into 
this meeting, this is '56, and Davies said, "Well, these 
gentlemen from the States representing Aramco shareholders were 
very anxious to have this meeting with you, Your Excellency, and 
they want to bring their good wishes and a few matters they might 
like to discuss. So I turn over the floor to you." 

Well, George Parkhurst was always fast on his feet, and very 
diplomatic. And he said, well, what a pleasure it was, and what 
a pride Standard Oil Company of California took in Aramco and its 
wonderful relationship with the Saudi government and so on, and 
what a pleasure it was to be here and pay respects. And stopped. 
Every one of them made similar speeches. Never once did they say 
anything about the things they had come out to tell them. 

Hicke: That's all they said? 

Owen: That's really all they said. And so Davies said, "Do you have 

anything more to say?" "Well, Mr. Brougham and Mr. Owen probably 
have some things that we'd like to listen to, see if we have any 
comments on." So we had to tell them again after--. It was a 
little frustrating. 

But by the way, we were always very good friends, these were 
all great gentlemen. We were very fine friends. But they had 
their corporate objectives, and they had- -well, George Parkhurst 
had Gwin Follis after him, and who's going to cross Gwin Follis? 
Who followed Gwin-- 

Hicke: Bill Haynes? 

Owen: Well, Bill was a little- -not quite as austere as some of the 

chairmen have been. [laughing] Bill was great. Well, they all 
were great. 

Hicke: But their leadership styles changed. 

Owen: Their leadership styles changed, but the thing is, the people who 
were the directors of Aramco were among the very top Directors, 
maybe the number two next to the chairman, of each of the 
companies. But the chairman would tell them what position they 
had to take. And Harvey Cash once told me over a scotch and 
soda, he said, "I'm getting so tired of this. Everybody thinks 
I'm an ogre. You know damn well, Bill, that Gus Long calls me in 



364 



his office every day before anything happens in Aramco, 
something's coming up, and says, 'Now Harvey, we've got to 
maintain this position come rain or shine.' So I guess I seem 
pretty unreasonable sometimes." But that's the way it was. 

Hicke: Okay, we're still in Government Relations here, and I've got 

arbitration on claims of foreign government for additional taxes 
on oil sales. Is that part of what we've been covering all 
along? 

Owen: Oh, yes, I call that the Tapline-Sidon price claim, and I've 
covered that. 

Hicke: Oh, yes. What else in Government Relations? 

Owen: Government Relations- -I 've forgotten the organization chart right 
now, but Government Relations was a very large part of Aramco. 
We had representatives in Jiddah, a representative office there, 
which Garry Owen handled for some years, Clark Cypher after him; 
Jim Knight, and we had a big office in Riyadh, which was handled 
by various good people, the most important of whom I think is 
Mike Ameen. Those offices consisted of an American 
representative, and I'm talking primarily now about up until the 
early seventies, an American representative and several very good 
strong Saudi people who would accompany. 

Then we had representation offices at Ras Tanura, in Abqaiq, 
and obviously in Dhahran, local, and on top of that was the 
Government Relations structure which had head of Government 
Relations, and general manager, and I put in the Policy and 
Planning Staff. 

We had very strong Government Relations people. For 
instance, my assistant general manager, Bob Henry, had grown up 
in Egypt, and he had dealt with the Arabs all of his life and was 
a very competent individual. We had the Translation Division, 
which any time anything needed to be translated was sent to them. 
As a matter of fact, they translated our agreements with the 
Saudi -Arab government, which had to be made in both Arabic and 
English. The way they'd do that is I would send them- -and I 
forget, I think Rick Vidal when I was there was in charge of that 
particular division--! would send them a copy of an agreement, 
let's say for instance of the March 26, 1963 agreement. It might 
be about thirty or forty pages. They would translate it to 
Arabic. 

And then, I would always insist- -now, the whole company used 
the translation unit, but I'm telling you the way the Law 
Department used it in our major agreements- -I would take that 



365 



Arabic text and Rick Vidal, or whoever was head of the 
translation, would give it to one or two persons who had not seen 
the English, had no idea what the English was, and bring an 
English translation back. 

Hicke: Oh, good idea. 

Owen: And so then, I would compare the two English, what I sent them 
and what I got back after it had gone through the Arabic. Then 
we could see where the difficulties might be, and where the 
ambiguities were. 

Hicke: Excellent idea. 

Owen: I was very proud of that one. I started that. 

Hicke: That must have been extremely helpful. 

Owen: That was extremely helpful. 

Another thing that was helpful- -and I'm sure Pete (Speers) 
told you about this- -was he and Sami Fahmy--more about Sami in a 
minute- -prepared a glossary of oil terms in Arabic and English. 
No, he didn't tell you? I think that's probably somewhere- -it 
was Pete, I think it was Pete- -and Sami Fahmy. Sami was Saba 
Habachy's number two lawyer in Cairo, and he also was Aramco's 
interpreter for all of our price negotiations up until the early 
1960s when Yamani came in, and we've spoken English from that 
point on. 

Hicke: I didn't realize that. 

Owen: Up to the time that Yamani came in, everything was in Arabic, and 
we had Sami Fahmy there. He was a wonderful, wonderful guy. 
Sami left Egypt, actually was forced out of Egypt, I'd say, 
during the Nasser days, and so the Company found a job for him 
first with Tapline in Beirut, and then created one for him in the 
New York office. He got his law degree, being already a very 
accomplished lawyer, one of the best in the Middle East, went to 
New York University night school and got an American law degree, 
passed the New York bar, and I took him in the Law Department. 
Up to that time, I'd had him as a consultant to the Law 
Department. Sami turned out to be one of the key Aramco lawyers. 
He died about three years ago, here in Houston. 

But he was our interpreter, so we had pretty high level 
people. He spoke as good Englishhe and Saba were at least 
trilingual completely, in Arabic, English, and French. 



366 



Well, and so from the time that Sami translated for me, I 
had talked about sour crude. Surur interrupted and wanted to 
know what was sour crude . His interpreter was Said Sami , who was 
a Saudi, very knowledgeable. He said, "I'll answer that question 
to the minister. That's crude with lemon." [laughter] Sami 
recounted all this to me. I said, "No, no. It's crude with an 
unacceptable hydrogen sulfide content, poisonous." It takes much 
more processing on sour crude than on sweet crude. 

Hicke: Did you say sulfite or sulfide? 

Owen: Sulfide. So we had incidents like that on the thing. A 

glossary--. So Sami proposed, "Why don't I fix a glossary of all 
terms, and we'll see that it gets to the Saudis, and it may help 
us in some of these negotiations." And as I recall, it was about 
100, 150 pages. I've got all this stuff, and a lot of the stuff 
I had in my personal files like this, I'll be glad to donate to 
the University of California, because I'll find them as I go 
through things in my garage . 

But at any rate, I was talking about the translation 
division. So Sami got someone, and I think it was Pete, to work 
with him, and they put this out, and it turned out to be very 
helpful. I know that the Saudis appreciated it, because we'd see 
when we'd go into negotiations that-- 

Hicke: You could tell they'd studied their- - 

Owen: You could tell they had studied and knew the terminology in 
Arabic and English. 

And there was the Research Division. That had been George 
Rentz's division, and Rick Vidal was there for a while, Rick 
Vidal who later became professor of archaeology at Southern 
Methodist College, and a very interesting person, very 
knowledgeable. He loved researching into things like the dead 
language of one part of Saudi Arabia, and Tom Barger would put up 
with that kind of thing. I wasn't quite that charmed by it all. 
I didn't see why we should send two men out on the desert for six 
months trying to find a lost language. But they thought so. 

Hicke: Basic research. 

Owen: But George Rentz thought so, and Tom Barger thought so, so that 
was fine. We did that. 

Hicke: Well, there is value in it, but maybe not to Aramco. 
Owen: That's right. 



367 



Hicke: Wasn't quite in their job description. 

Owen: Right, right. I didn't mean I'm against it all, just as a 
corporate activity, why, it seemed a little strange. 

Hicke: Exactly. It's more like some university. 

Owen: We had the Research Division, we had the Administration Division, 
which ran all of the administrative offices, which ran all of the 
representation offices that I've described to you before. It was 
the coordinator of those offices. They didn't really report to 
the Administration Division. All the direct representation 
reported to the assistant general manager up the line, because 
that was where the action was, and we couldn't afford to have 
delays and things in that. So functionally, they reported to the 
assistant general manager and administratively to the salaries 
personnel, all that kind of thing. 

We had a special library. This is apart from the Aramco 
library for the public, that the Government Affairs- -it was 
called Government Relations Research Division, and then it later 
became Government Affairs, and Research became some other name 
and all the rest of it, but we're talking about the Research 
Division. They had a wonderful research library. 

Hicke: Pete told me about that. He said he's afraid it got a little 
scattered, or he doesn't really know what's happened to it. 

Owen: Well, I'm with Pete; I'm afraid it did. 

Hicke: But I was asking him how they were able to establish boundaries 
and all of these things, and he said they had an excellent 
library. 

Owen: Oh, they had a wonderful library. And the people to deal with 
those subjects. All in all, as I recall, we had 1,200 or 1,300 
employees in Government Relations. 

Hicke: Really! That's much larger than I had known. 

Owen: In the late fifties, yes. While I was there, I tried to lend 
management support to them. They were all great, all of the 
representatives I had. I made some changes, but not many. I 
participated in major affairs outside of negotiations. I'd 
always been in the price negotiations, but any major problems 
with the government, I would handle or Bob Henry would handle, 
along with Mike Ameen, let's say, in Riyadh, or Clark Cypher in 
Jiddah, or Max Carter, I should mention that name, he was also in 
Jiddah. 



368 



As a matter of fact, I saw his son just a couple of weeks 
ago in Dhahran. He isn't with Aramco, he's with another outfit, 
but he was out there. He remembers me very well from the time he 
was a little boy and I would come to Jiddah, and they always kept 
a guest room for their visitors from Jiddah when we'd come down 
to check on them. That was very pleasant. 

Hicke: Sure. Another one of those so-called brats. 
Owen: Yes, another one of the brats. 

So it was really the Department of State of Aramco. 
Hicke: You were there for about four years? 
Owen: No, I was there for three years. That-- 

General CounselV/V/ 



Owen: They sent me to the Advanced Management School at Harvard 
Business School for fourteen weeks. 

Hicke: Was this in '62? 

Owen: In '61. They had that coincide, be the last class before George 
Ray was going to retire, so that when I came back, I came back 
just a few weeks to Government Relations and then became general 
counsel , moved over . 

Hicke: So now we're in '62, when you became general counsel. 
Owen: Yes. 

Hicke: Okay. Well, let's see: where should we start? What did you 
start with? 

Owen: We had lots of contracts, we had lots of work to do with foreign 
suppliers, we had lots of work to do on labor laws and employment 
contracts, we had these problems with the Saudi government, such 
as the price problems, and many, many others. I think I 
mentioned yesterday customs problems in another context. 

I was blessed with having acquired a very competent staff, 
and spent a lot of time while I was there on replenishing that 
staff and recruiting good people. For instance, Stan McGinley, 
who is the present general counsel, was recruited by me in 1966. 
David Kultgen is one of the two outstanding University of Texas 
lawyers who was recruited by me from the University of Texas in 
1973. He's now associate general counsel. Les Lewis, Lesley G. 



369 



Lewis, who is the associate general counsel of the enterprise, of 
the company's Law Department, represents Aramco, ASC, Saudi 
Refining Company, Aramco Company, which owns the airplanes, and 
all our subsidiaries. 

But Les Lewis was very interesting there. I met him when he 
was with the consulate in Dhahran, and I was general manager of 
Government Relations. He was very young, with a young family, 
but determined to be a lawyer, so he quit the State 
Department- -he was a Georgetown graduate- -quit the State 
Department and got a legal scholarship to Syracuse University and 
spent three years there. He got in touch with me in his third 
year, and he stepped right out of Syracuse Law School back into 
Dhahran. So I recruited him, the third associate general counsel 
of Aramco. These are the people who run the Law Department. 

Al Burgoyne , whom I recruited from Cornell [University] in 
1967, and--. But I spent a lot of time recruiting. I recruited 
many others that I haven't mentioned here, but spent a lot of 
time on it. 

And I spent an inordinate bit of time on the price 
negotiations and the participation negotiations, leaving a lot of 
the day-to-day running of the Law Department and other matters 
almost completely to Jack Curry, who was my successor as general 
counsel. Because there wasn't going to be any Aramco if we 
fouled up on our price stuff, and there wasn't going to be any 
Aramco if we fouled up on our participation. So both Bob 
Brougham and I spent a tremendous part of our time on that, 
traveled a great deal, which was a little different from the 
previous administration, where George Ray made it a policy never 
to get in the major negotiations himself. 

Now, he made that a policy, but he violated the policy 
several times and did. But I felt it was part of my job, that 
that's where I was needed as general counsel, to do it, 
especially since I had such competent people, such as Lou 
Goodyear from PM&S , Neil Godfrey from California- -unfortunately 
Lou, who was with the department when I came in, he and his wife 
were killed in an automobile accident in 1966. Neil Godfrey, who 
was very high up, died of a heart attack while riding a horse in 
1967. I lost a few that way. 

Howard Palmer, from White & Case, who was another of the 
strong people that I had, and had recruited, suffered a heart 
attack and was out of action for a couple of years, which slowed 
his career down. He retired as associate general counsel. Any 
of these people I mention might well have been- -they were all of 



370 



the caliber to be general counsel. I don't know who would have 
made it when I retired if they'd all lived. 

But as I told you, like the Notre Dame football team, the 
depth in the Law Department was astounding. And 1 haven't 
mentioned Frank Bates, who was a lawyer's lawyer. Frank 
contributed a great deal. He had carried the books, sort of, for 
Felix Smith of PM&S. Have you ever heard that name? 

Hicke: Yes. 

Owen: So he had good schooling to get experience to be useful to 

Aramco. As I've told you, he was a classmate of mine in law 
school, but at that time, he was from Indianapolis. His father 
was a professor at Culver- -professor of history, by the way. Due 
to Frank, three of my four sons all went to Culver. 

But as I say, he was from Indianapolis, and when I last saw 
him before our graduation, which neither of us stuck around 
for- -nobody does for law school graduation; if you read your name 
up that you got your diploma, you say, "Mail it to me," and go 
out there and celebrate or find a job or something. [laughs] 
You don't wait for the next week when they're going to have a 
formal occasion. 

So I assumed Frank Bates was still in and around the 
Midwest, because that's where he was going to look. I knew that. 
So in 19- -I had a little bit of correspondence with Frank Bates. 
He was with PM&S. No, I'm going to take that back. I didn't. 
There was another lawyer there who was doing some Aramco work, 
and I wasn't acquainted with the name Frank Bates in that 
connection. I was thinking of the other lawyer. 

So George Ray wrote me a letter and said, "Bill, you've 
requested some assistance out there in Beirut, things are getting 
hot, you and Sandy are in these negotiations all the time and you 
need someone to arrange for the hauling and work out the railroad 
deals and so on. So I agree with you, I think it's going to take 
two of you, even three. I am sending Frank Bates, having him 
transferred, he's going to become an Aramco -Tapline employee. 
He'll be leaving PM&S, and he'll be arriving on such and such a 
date . And as to the third one , you find someone you want to 
hire. Take a trip back to the States or any way. He just has to 
be approved by me, but if he's--" 

Hicke: But you were going to get Frank Bates, regardless. 

Owen: I was going to get Frank Bates. But the thing is, I didn't 
connect him with the Frank Bates that I knew. 



371 

Hicke: Because he was from the wrong part of the country? 
Owen: He was the wrongand Frank Bates isn't an unusual name. 

So he arrived- -in those days, Beirut didn't have an 
international airport large enough to take the biggest planes at 
the time, which were the four-engine DC4s and so on, they could 
only take the smaller planes. And everybody came into Damascus. 
So the day Frank and family arrived, Frank and his wife and their 
little boy, the same age as our little Billy, and their little 
daughter, same age as our little daughter Randa, I couldn't go 
over to Damascus to meet them, so I sent Peggy with a driver to 
greet the new lawyer and his family. She had stocked their 
refrigerator, and she had everything ready, and we'd gotten them 
an apartment in the building next to ours and tried to make 
everything just as nice as we could. 

Next thing I knew, a few hours later, she called me at the 
office and she said, "Look, I'm at the Bates apartment. You 
don't know who Frank Bates is." I said, "Well, I know he's with 
PM&S." She said, "No, he went to Harvard Law School with you, 
was in your class." I said, "My God, not that Frank Bates! He's 
in Indianapolis." 

Hicke: Another small -world story! [laughter] 

Owen: Yes, and then Frank worked with me until his retirement, all the 
time from that point on. And as I say, he was a lawyer's lawyer. 

So after he retired, while I was still general counsel 
before my retirement, just a couple of years in there we had some 
very tough legal problems on joint ventures and that kind of 
thing. So I pulled Frank out of retirement for about six months 
back to Dhahran to work on those ventures , and brought Marge of 
course with him, his wife. Just about the time that he finished 
that, we had a pressing need in The Hague, because I'd had to 
transfer someone from The Hague to New York because of their 
expertise in a particular field, and asked Frank if he'd take six 
months in The Hague as counsel there, so he did. So after he 
retired, he worked a lot full time with me. 

So there's your Frank Bates story. 



372 



Pricing Negotiations 



Hicke: That's great. Well, I wonder if this would be a good time for 
you to sort of outline how the pressures began to build up 
through the sixties toward the increased participation, and the-- 

Owen: Okay. Well, the pressures began to build up, not for 

participation, but for pricing in the early fifties, from 1950 
on, from the time we signed the December 30, 1950, agreement 
where we were going to pay an income tax to the Saudi government 
and the other governments in the world, because that all 
happened, they all went on a taxation basis at about the same 
time, all concessionaire companies. The countries had a real, 
what I thought, legitimate interest in what the price was going 
to be, because their income depended on it. So the pressures 
built upon that. 

We largely dissipated them by the March 24, 1963, agreement, 
which was a culmination of all the negotiations we had had for 
ten years on the subject. We settled the Sidon claim as a part 
of that. We essentially removed any discounts to the owner 
companies- -essentially ; a few remained. We made some further 
relinquishment of territory- -now, that was in a separate 
agreement dated March 24, 1963. They were both dated March 24, 
1963. Then there was an agreement with Tapline dated March 24, 
1963, so there were three agreements that day. That was a 
culmination of the price thing. Yamani was very well satisfied. 

Now, the relinquishment agreement was insignificant, really. 
And the Tapline agreement was comforting to have, but not of 
great moment at the time. The main problem had been the pricing. 
We did need to settle the basis on which we would transit Saudi 
Arabia with the Tapline oil and give them something which they 
hadn't gotten there, but they weren't very sanguine on that 
either. They were interested in the price matter with Aramco, 
and oncewe settled that, everything else fell into place. 

So early the morning of March 24, 1963, Brougham, Curry and 
I, together with my secretary, Helen Bard- -no, no, it was not 
Helen at the time, it was Jeanie Anderson, Jean Anderson, who 
later came back and worked for George Ballou in Standard of 
California, a very nice man, sort of a very well internationally 
known vice president of Socal. His wife's name is Joanna. 

Well, Jeanie went with us. So Brougham was all on pins and 
needles, we were to sign these various agreements. He wanted 
everything to Just be up to spit and polish. The night before, 
Yamani had told us before we went back to Dhahran, when we'd all 



373 



shaken hands and agreed on every word of the text, and it was 
just the formalities of signature remaining the next day. (With 
a lot of people in the Middle East, particularly some Syrians I 
dealt with, you wouldn't have even felt there was a possibility 
you had an agreement at that point. With Yamani, we knew his 
handshake was good . ) 

And so it was going to be a gala day for us. So Yamani had 
just said, "Well, we'll get this all signed, sealed, and 
delivered." Brougham said, on the plane going over, "What does 
he mean, 'sealed'?" Jack, very helpfully, said, "Oh, he's 
probably thinking of old English cases and old English agreements 
where you seal things in red wax, put a ribbon on them." 

He said, "That's a good idea, I bet that's what he meant. 
As soon as we get to the office, Jeanie," and he was talking to 
my secretary, "would you please have Mike send somebody in the 
office out to get some green ribbon, pretty green ribbon, a yard 
or two of it, and some sealing wax?" I said, "Honestly, Bob, I 
wouldn't take Zaki that literally." 

He said, "No, but I think it's a good idea, too. We've 
worked many years for this agreement. Let's formalize it." 

They came back with that, and they did have some sealing 
wax, but we didn't- - 

Hicke: Where in the world did they get sealing wax? Some kind of candle 
wax-- 

Owen: Some kind of candle wax or something, at least they got some kind 
of wax, in a red color. So the question was, how to apply it? 
Brougham and I were talking about something else, and Jack and 
Jean went into an adjoining room where they were going to put 
ribbons and seals on the two original documents, one for the 
Saudis and one for ourselves. And then the other agreements, the 
Tapline agreement and the other stuff too. 

All of a sudden, Jean said- -I heard her sort of --"Jack, 
you're burning the agreement!" I thought Brougham was going to 
die! He jumped up, he ran in there. And sure enough, it had 
caught fire while he was trying to get the wax on, and there was 
a little corner of the last page that had burned. [laughter) 

Well, those were the days before we had copy machines and 
all that kind of thing. Jeanie said, "No matter, we still have 
forty- five minutes. I'll retype this page," just had to retype 
the last page, which she did. But I thought that was very funny. 



374 



But then afterwards, we did put the sealing wax on, but this 
time we didn't leave it up to Curry and Jeanie. [laughter] 

Hicke: Signed, sealed, and delivered. 

Owen: Yes. So at any rate, that's my story on those important 
agreements . 

So I have to tell you what happened. The minute they'd been 
signed- -oh, by that time, Saudi Arabia had television. It was a 
very limited television, and it was only affairs in the Kingdom 
and all. That room, Yamani's office, was absolutely filled with 
TV camera men. So they- -I should have brought you the album of 
this to see- -they took pictures of all of us signing, every time 
that Yamani signed something, I was over peering to be sure he 
signed it at the right place- - 

Hicke: You were hanging over his shoulder- - 

Owen: Hanging over his shoulder, and his counsel, Yamani's counsel, was 
hanging over Bob Brougham's shoulder as he was signing these, and 
then we got rid of Brougham and got John Noble, president of 
Tapline down, and hung over his shoulder. It took about an hour, 
hour and a half. 

Well, Yamani was so pleased with the whole thing, and a very 
nice man, by the way- -he ended up a very, very good friend of 
mine, and still is --but he said, "Well, I'm going to call the 
King." So he called Faisal. Faisal told him in Arabic, as he 
told us later, recounted the conversation a moment later, Faisal 
said, "Well, that is very welcome news. It bodes the dawning of 
a new era. I want to have a tea party this afternoon in the 
palace. I want all of the wives of the Aramco delegation here." 

Hicke: In Riyadh. 

Owen: In Riyadh, "by four." 

So, we got the word back to Dhahran, and we got through by 
radio telephone- -we didn't have any other kinds of telephone at 
that time- -and fortunately, made almost immediate contact. 
Government Relations began sending people around, looking for 
Hazel Brougham and Peggy Owen and Lois Curry and Kath Barger and 
all these people. 

Well, Peggy was playing golf in her golf clothes, and by the 
time they got this word, it was about noon, and they were going 
to have to leave by about 1:30. Let's see, and they caught Lois 
Curry in the commissary, they caught Fred Moffett's wife, Betty, 



375 



playing bridge someplace --oh, they were practically- -they were 
just combing Dhahran to find out where all these wives were. 
They wanted the president's wife and the chairman's wife too, you 
know, and all of that. 

So they rounded up all they could- -they never found Kath 
Barger. She was shopping in al-Khobar. But they found Tom; Tom 
couldn't find Kath! [laughter] So Tom and this planeload of 
wives took off about 12:30 and, combing their hair on the plane 
and putting their makeup on and changing their clothes, and so 
they shoved Tom up with the pilots so they could have the whole 
back part of the plane to dress for the tea party. [laughter] I 
have a whole album of pictures of that party. It is one of the 
funniest- -as a matter of fact, the wives looked very nice. You 
wouldn't have known that they'd gotten on with shorts or slacks 
or whatever, and had been out playing golf, tennis--. 

Hicke: 1 wonder why Faisal didn't think of this before. 

Owen: Nobody did. Well, it was a great gesture. It was the first time 
that foreign women had been invited to the palace. 

Hicke: Oh, it was? Oh, my. 

Owen: So that marked the beginning of an era. 

Hicke: Indeed, in many ways. 

Owen: The religious leaders didn't like it, but Faisal did. It was 
significant, and it's worth your taking down. 

Hicke: Indeed. It's another example of what I always say, some of the 

best stories are very illustrative of watershed events. But in a 
really colorful way. 

Owen: Well, this was a very important set of agreements. 
Hicke : Where do we go from there , then? 

Owen: Well, then, so those pressures were off a little bit. Saudi 

Arabia was pretty much satisfied at the point. But there were 
still a few discounts extant. Iran and Venezuela and other OPEC 
members wanted those eliminated. So we negotiated, by that time 
we couldn't negotiate in bodies, like several companies at the 
time, because of antitrust restriction. But they negotiated, the 
companies that were interested in Iran negotiated something in 
Iran. It ended up in the January 25, 1965 agreement, which was 
the day that Aramco and the Saudi government signed it. I 



376 



believe that other countries and other companies signed it the 
same day, but some of them could have been the day before or day 
after. But that bought a little peace. 

Aramco and Saudi Arabia still had one problem: the 
discounts on the sales to the U.S. military, the U.S. Navy, that 
we had been giving. That was a tough problem that we were trying 
to do. Veil, we were in the middle of those negotiations when it 
was time for Brougham to go on a long vacation, and so he turned 
them over to me, and so I stepped out as general counsel and 1 
called Neil Godfrey to come on up, to "Get on the next plane, get 
up here, I'm your client. You're my lawyer. I can't negotiate 
and be the lawyer at the same time . " 

So Neil cane up, and I negotiated the agreement in the 
next- -well, about three weeks, four weeks. By the time Brougham 
came back in two and a half months we had it all behind us, all 
signed, sealed, and ratified. 

Hicke: You negotiated with Yamani, that's who--? 

Owen: Yes. 

Hicke: And this agreement covered the price of-- 

Owen: The sales to the military, plus it covered commitments by Aramco 
to build LNG [liquified natural gas] plants. It covered a lot 
more than that; it was an important agreement, but it was the 
last of the important agreements. 

Hicke: But it was also significant, because of what happened during the 
boycott. 

Owen: That's right. So in September, 1966, Yamani and I signed that 
agreement. That was the last really definitive, significant 
agreement that Aramco as a concessionaire had with Saudi Arabia. 
I'm sure the re- - 



Hicke: Okay, you were just saying there's the participation agreement. 

Owen: The participation agreement and so on, but that was something we 
had known was coming that I'll cover in just a minute. 

But this ended the price hassles, because now the companies 
had what they wanted pretty much, so far as all the pricing was 
concerned, and now it was a question of how much participation 
beyond taxes they would have. This first came up in OPEC; it was 



377 



an OPEC idea, an OPEC demand. They wanted to be given 
participation in all the concessions. I've forgotten when the 
speech was made- -I think it was '67 --a speech made at one of the 
OPEC conferences which was widely circulated, said what their 
objective was there, and shortly thereafter, we all got in 
negotiations . 

Hicke: Made by whom, do you recall? It wasn't Yamani? 

Owen: No, no, it wasn't Yamani. But there was at a later time a speech 
made by Yamani a few months later, in which he endorsed the idea 
of participation, but it was a very moderate speech. It 
indicated only over a period of time, and so as not to disrupt 
operations and world markets and that kind of thing. He was very 
reasonable on it. So we began negotiations on participation in 
'69. 

Now, back in '53, when Spike [Spurlock] met me and told me 
to take over price negotiations from him in Schiphol Airport in 
Holland, and I've covered that elsewhere, that meeting, he said 
to me, "Bill, you know what's going to happen. We'll hold the 
line on prices as long as we can, but eventually, we're going to 
end up pumping oil for the Saudi government, and so is every 
other American and British oil company." 

Hicke: He saw that coming? 

Owen: Fifty- three, he predicted it. And that's what we were heading 
toward. Brougham again headed our team, with me as his counsel, 
and Les Lewis. [By that time, Lou Goodyear had been killed and 
Neil Godfry had died, and Jack Curry was my associate general 
counsel, and my brightest young man at the time was Les.] So Les 
joined us, and Fred Moffett from the accounting department. The 
four of us were sort of a team. Through the various stages of 
participation, eventually, when Brougham retired, even when he 
was chairman, he was at these meetings. But he was eventually 
replaced in the negotiations with Jungers, and Jungers later by 
Kelberer, and I was replaced in '75 when I retired by Curry. 

Then when Curry retired in '86- -okay, we had full 
participation by that time. Stan McGinley, when he came in, he 
didn't have to worry about participation. We no longer had any 
ownership interests; we had sold them. 

But he was confronted with a whole new set of problems. 
Aramco went downstream. I don't know whether you know this or 
not, but Saudi Aramco and Texaco are in a joint venture, Star 
Enterprises of Houston, whereby Aramco furnishes- -guarantees the 
oil necessary for Texaco' s eastern operations, all its service 



378 



stations, everything else. The stations are half owned by Saudi 
Arabia, half by Texaco now. 

Hicke: No, I didn't know that. 

Owen: Yes. It's Star Enterprises. 

Hicke: What are their stations? Are they Texaco? 

Owen: Texaco. The public doesn't know that about it. Saudi Aramco is 
half in it- -not the western stations. They just made this deal 
for the eastern stations, which do, by the way, comprise I 
believe more than 50 percent of Texaco's activities in the U.S., 
and refineries. All the refineries in those areas too. So 
Texaco and Saudi Aramco are partners in more than one -half of one 
of the biggest marketing and refining and transportation 
operations in the United States. You didn't know that. 

Hicke: No, I didn't. As I told you yesterday, I often know what 

happened thirty years ago, but don't know what's going on today. 
Okay, so that was Mr. McGinley's problem. 

Owen: Well, yes, but in addition to that, then the Saudis have been 
buying tankers --oh, they're in the transportation business. 
They've been-- [tape interruption] Okay, where were we? Okay, 
what subjects do we have to cover? I'd come to the end of that 
one. Whatever it was. 



Negotiating Saudi Ownership Participation 

Hicke: Yes, but we haven't done participation. We just got started on 
it. 

Owen: Oh, participation was a series of negotiations that we had, many 
of which were held by several companies with several 
representatives of OPEC, several governments, with U.S. 
Department of Justice clearance. They always had John J. McCloy, 
or one of his top assistants, attending every meeting to be sure 
that nothing was said that would violate antitrust, and the mere 
fact that we did that insulated us from anything, because nothing 
was ever said, or it would have been reported. The U.S 
government trusted John McCloy, as everyone else did. 

His daughter, by the way, is- -I was going to say she was an 
historian for Mobil. She isn't an historian for Mobil. She is 



379 



in charge of all corporate giving, all corporate donations, for 
Mobil, stationed in Virginia. 

Hicke: Is there anything that you can tell me particularly from your 
viewpoint? 

Owen: Well, from my viewpoint, Les Lewis and I drafted the first draft 
of the 1970 participation agreement, probably in 19- -it was 
signed in December, 1970, and we'd been working on it all year. 
It was some time in the middle of the year that we met with owner 
company counsel in London, and we had a draft to put out on the 
table, and so did one of the owner companies. But we got ours 
out first, which in law and negotiation is always a good idea if 
you can do it, because then you're working from a document you 
understand. 

Hicke: You sent it out ahead at the meeting? 

Owen: No, no, we had it as a hand-out as we got into the meeting, said 
that okay, we know we had to have a draft, and here's a starting 
point. 

Hicke: Okay, and it was one you were familiar with. 

Owen: One we wrote, Les and I wrote, and we were familiar with. So we 
met for about a week, and we haggled over that agreement back in 
London. Then the counsel for the owner companies came back and 
haggled with their bosses and with their Executive Committee 
members. Then we met a few more times, and finally we got it in 
shape and got it signed. 

So I was in every negotiation on that --including all private 
lawyers' discussions where we didn't need the executives, and I 
was in on all the executive discussions too, which we had with 
Yamani, or we had with the owner companies. Brougham and I were 
in those together. 

Hicke: Were you batted around between the two? 

Owen: Oh, yes, we were batted around. We expected that, but we finally 
got the result we wanted. 

Then the 25 percent participation agreement was changed, I 
think first by Kuwait, that they wanted a 50 percent interest in 
the Gulf-B.P. concession in Kuwait, the big Kuwait oil company 
concession. That spread so the others wanted the same thing. 
So, in essence, at the time that I left see, these things take a 
period of --this took a period of twelve years, let's say. Like 
the price negotiations, I told you how long they went on. 



380 



By the time I left, we were at the stage where we had 
resigned ourselves and more or less agreed that the Saudis could 
have a 50 percent interest. Then it later became 80, and finally 
100, but I was gone by that time, and know none of the details. 

These were all done up to the time I left by very informal 
agreements. They were agreements, signed by both parties, but 
not widely circulated. But the financial effect was given to 
them from the very date of signature. The day after the Saudis 
became signatories to the 25 percent participation, they had to 
pay- -well, we'd deduct the expenses, whatever, that they were 
entitled to, and they got their profits, they got a fourth of the 
profits. And so on. It's that simple. 

It is tough- -boy, if you go through this --Marcel Grignon 
knows more than any man alive on this, because he followed this 
and did nothing but this for years until his retirement and 
afterwards. He was retained by the owner companies to help 
straighten it all out. So that's the story of participation. 

But it was a foregone conclusion to some of us, first Spike 
Spurlock in '53. It became more evident that we were fighting a 
delaying action all the way through, and very successful in that. 
We had an excellent rapport with Sheik Yamani, who did a great 
many things of statesmanlike value to the world. For instance, 
in the oil crisis of the mid- seventies , '73 and '74, the oil 
embargo and so on, he was the moderating influence. I mentioned 
yesterday that Frank Jungers and I made some trips with him when 
he would make speeches in various countries. 

Yamani was the one who discouraged precipitate action by 
some of the nations inclined to be more hot-headed in OPEC. He 
was always a moderating influence, and a reasonable influence. 
So that's about all I can say on participation, and I'll bet Les 
Lewis right here could say a lot more, because he continued after 
I had left. 

Hicke: Yes, all the way through to the-- 

Owen: Yes, and Jack Curry, of course then, too. But Jack only picked 
it up when I left, so Les is the one who has the overall story. 
On one little phase of it- -well, not little phase, it's the 
accounting stuff, the complications of the accounting in all 
this, and the agreements, Marcel Grignon has knowledge of that. 

Hicke: Well, you mentioned the boycott -- 
Owen: Oh, excuse me-- 



381 



Hicke: The embargo. 

Owen: I left out one major agreement. I told you that in '66 we 

thought our price problems were pretty much behind us. But then 
OPEC would see little things that they wanted corrected. They no 
longer wanted a 50 or a 55 percent tax, they wanted an 85 or a 90 
percent tax. They wanted several other things; for instance, 
they wanted to do away with all royalty crediting, make it all 
expensed, and they had already taken a large part of it. 

But it was mainly trying to move this up, and then they also 
wanted to have the companies agree that the price would go up to 
a certain level at the date of signature of an agreement, six 
months later to another level, six months later to another level. 
And this started the price spiraling. 

This was negotiated by all the industry with OPEC, the 
principal, final negotiations being in Teheran in 1971. Jim 
O'Brien was there, by the way. Frank Jungers and I were 
representing Aramco. Yes, Brougham had retired, and Frank and I 
were there . You can get hold of the copy of the Teheran 
agreement almost anyplace. It's self-explanatory, but I'm 
hitting the major things. 

Hicke: Yes, well, why don't you tell me things that aren't already 
written down? 

Owen: Yes. So we can say that the Teheran agreement had the result of 
taking pricing completely out of the hands of the oil companies 
and put it in the hands of OPEC. 

Hicke: Oh, okay. 

Owen: Some people might not agree with that flat statement, but I think 
it's true. It was a very important agreement, and it was the 
last agreement that I know of that was signed by the governments 
with concessionary companies before they took over. The last 
agreement on details, and the others would be on participation 
itself. So I think that's interesting. 

Hicke : Now are we ready to go to the embargo? 

Owen: Yes. When the embargo occurred, it was a political problem, not 
an economic problem. Yamani did a lot to try to smooth that 
over, and it had effect for a while. Didn't really- -it was 
nothing more than a ripple in oil history. That's all I need to 
say about it. 

Hicke: All right. 



382 



Owen: What else haven't I covered? 

Hicke: Actually, we're doing pretty well here. You weren't involved in 
the natural gas project or the electrification, that all happened 
after you left? 

Owen: I was only involved to the extent that we, Aramco, got in a major 
contract dispute- -Aramco was building the electrification 
project. I was in this as Aramco 's counsel in an arbitration. I 
did not get involved in the LNG; it was just starting when I 
retired. Some things had been done on it, and I'd purposely 
stayed out, because I wanted Curry to do them and have the 
continuity. 

Hicke: What about the things that you did after you retired on a 
consulting basis? 

Owen: Well, I took care of the anti-boycott stuff for a year. My most 
notable accomplishment was Aramco was so frustrated that it had 
ceased purchasing completely in September of 1976, and it was 
getting desperate to get supplies in. The Executive Committee 
met with me at the airport here- -they had converged from New York 
and California here, with Curry and others and that's when Curry 
said, "Look, this is a job, with the stuff we're doing out in the 
field, I can't leave and spend all of my time in the States, so 
we've got to get some outside counsel to handle this for us, and 
I would like Bill to do it." They thought that was a good idea. 

I remember their saying, "Well, the first thing you've got 
to do, Bill, is figure out some way we can begin purchasing 
again." So I came up within two weeks- -immediately , I began 
going into the office. The office opened at 7:00; I'd be there 
at 6:00. The office closed at 3:30, and I'd be there until 7:00 
or 8:00. Did this for a year, and traveled all over to 
everyplace. This is where I mentioned I met Clydia on this. She 
was traveling with Frank Roberts on the whole thing. 

Hicke: Oh, yes, I interviewed Frank Roberts. 

Owen: Oh, Frank's a great guy. We worked very closely on this. 

But within a couple of weeks, I proposed--! said, "The only 
thing I think you can do right now is to continue purchasing. 
Purchase from anybody, don't ask any questions. You don't care 
anything about them. But get this clause in the contract, the 
risk of loss clause." Have you ever heard of that clause? 

Hicke: I don't think so. 



383 



Owen: The American Jewish Congress doesn't like it. We enter into a 

contract saying, "If, however, these goods--" and I'm not trying 
to quote it; this is the idea of the clause. It's more expertly 
drafted, I'll assure you. "If, however, these goods which are 
needed for our operations in Saudi Arabia are refused entry by 
the Saudi government authorities, you agree to refund the 
purchase price and remove them from the Saudi port, taking them 
however you want at your expense." We shifted the risk of loss 
from ourselves to the suppliers. 

So Frank Roberts said, "Well, could that be evasion?" So 
on. I said, "Well, it could be. I hope it isn't. But it's the 
only thing I can come up with right now. I think it has a 
reasonable chance at least of succeeding." So Socal went along, 
and Exxon went along. Mobil was very enthusiastic about the 
thing. Texaco took an awful long time, and dragged its feet and 
dragged its feet. 

So finally Jungers, who was very tough, he just let de Crane 
know that unless they could give good reasons of contrary, the 
risk of loss clause would go into effect and be on all Aramco's 
contracts, and Aramco would resume normal operations subject to 
the risk of loss clause, as of --and he gave him twenty- four 
hours, I think, or whatever. 

Well, it worked. But no one else of all the companies in 
the United States, not even Bechtel, with whom I was working 
closely, were willing to stick their necks out enough to put it 
in their contracts. It's only Aramco and Mobil. 

Hicke: Has it ever been tested? 

Owen: Well, let me-- 

Hicke: Okay, I thought you were going to change the subject. 

Owen: Oh, no no. It was attacked in the press, everyplace else, as 
avoidance. Stanley Marcus, who had been the legislative 
assistant to Adlai Stevenson and had a lot to do with drafting 
the Export Administration Act, had become the head man in 
Commerce administering the plan, and particularly issuing the 
regulations. Naturally, the legislation doesn't say anything 
about the risk of loss clause being good or bad, it just is broad 
language . 

So I had a number of meetings with Stanley Marcus, in most 
of which I took Jeff 0' Sullivan, a White & Case partner that I 
expected would succeed me as the so-called czar of anti-boycott, 
because I wanted to get out of this as soon as I could. Several 



384 



meetings, and I took Tom Pierce, who was head of Aramco 
purchasing. He's a Britisher, a very interesting guy. He had 
been with Aramco Overseas Company all of his life and then came 
out to Aramco as head of purchasing, but he was extremely 
knowledgeable and helpful in figures and where to get them and BO 
on. We were able to show Marcus that if Aramco wasn't allowed to 
continue its purchasing, it could not live with anything that 
anybody had come up with yet, except the risk of loss clause. 
Tom was very effective in explaining to Marcus what that would 
mean to U.S. trade and to U.S. companies. 

And so Marcus, who by the way was Jewish, when it came down, 
he said, "Just continue to use the clause. It's going to be a 
month or two before I get my regulations out, because I haven't 
gotten all of you guys' comments in. I've got to get comments in 
from hundreds of companies, but continue using it. Keep Aramco 
going. In the regulations, I'll have to say it's good or it 
isn't good, but in any event, whatever I say will only be from 
that date forward. There will be no penalties for the past. I 
will put language in that will indicate that the prohibition is 
not specific enough in the law, and therefore there's been no 
violation," which was helpful. 

So when the regulations came out, Marcus notified us all 
twenty- four hours before. I've forgotten whether Frank Roberts 
was there; my lord, there must have been 500 people there, big 
auditorium, Commerce Department when Marcus walked out on the 
platform and told us about his regulations. He said, "And as we 
leave this meeting, advance copies will be available to each of 
you at the door." We're the people who had put in submissions, 
or we in Aramco put in submissions, aides memoir at the White 
House, and everything else- -everything we could do. 

But final analysis, he was asked at this meeting, "What 
about this clause that evades" --you can imagine who asked 
this --"evades the intent of the EAA, the risk of loss clause?" 
Marcus said, "Well, I don't see it, and we don't see it in the 
Commerce Department, as evading the intent. We think that its 
use has been perfectly legal," indicating that we weren't going 
to be prosecuted for anything. "In the future, however, in 
homage to the very strong views against the clause--" 

M 

Owen: "We may consider it evasion and illegal if used by anyone except 
those who have used it up to this date." [laughter] 

Hicke: Grandfathered in! 



385 

Owen: Grandfathered it in. It's grandfathered to this day in. 

Hicke: Good for you! That's quite an accomplishment. 

Owen: It's grandfathered to this day. 

Hicke: For you and Mobil? 

Owen: And Mobil; for Aramco and Mobil. Nobody else. But I thought 
that's an interesting anecdote I could tell you. 

Life in Arabia 



Hicke: Well, I think I have more or less covered all the topics I had to 
ask you about. Is there anything that you think of? 

Owen: Well, you did want to know something about life in Arabia, and 
Peggy, and that kind of thing. 

Hicke: Oh, of course. Yes, okay, let's start back with--. 

Owen: Saudi Arabia was a very good place to bring up a family. The 

climate allowed swimming seven or eight months of the year in the 
Gulf. The company facilities had pools which could be used for 
the same period if people didn't want to go to the beach. There 
were bowling alleys, there were tennis courts, lots of them. 
There was from the very beginning a golf course. At first it was 
a nine-hole golf course outside of Dhahran camp on the way to 
Khobar, and later it became eighteen holes. 

Hicke: I've seen the pictures: it has oiled greens. 

Owen: Oh, yes, and the fairways were --they called the sand "fairways." 
I would call them sand and rock. 

Hicke: [laughs] Oh, dear. 

Owen: And the greens were browns, made by crushing various things, I 
think some nut husks and that kind of thing, and mixing it with 
sand and a little bit of oil. A little messy, but it worked. 
The idea was to have it operate about the way a grass green 
would, as nearly as possible. 

Hicke: It really did work? 



386 



Owen: Oh, it worked fine. Later, in 1973, the company decided it was 
going to build a more elaborate golf course, extend the camp 
limits and build a more elaborate golf course within the camp so 
the women could drive to it. You see, the women couldn't drive 
to the other one . They had to take a taxi , and there might be a 
taxi accident, or their husbands had to drive them or whatever. 
That was the main reason we wanted it moved into camp. 

George Larson was the great proponent of the new- - . So we 
retained Robert Trent Jones, who was the foremost golf course 
designer in the world. A great number of the famous courses have 
been designed by Robert Trent Jones. He came out and he laid 
this course out for us, and was our consultant all the way. So 
there are golfing facilities. 

I mentioned bowling, tennis, swimming. Boating, we've 
always had a yacht club; that is, at first it was nothing but- -we 
designated it a yacht club, because there was a nice little 
shallow place that we could put the three or four boats that 
people had in. But as of last week, all kinds of boat houses and 
a dining room and a restaurant at the yacht club there, the 
Dhahran Yacht Club, Aramco--. 

There used to be wonderful fishing there. There's still 
good fishing; there aren't as many fish as usual because there 
are more people than there used to be. I used to go out fishing 
either every Friday or every other Friday at about 3:00 or 4:00 
in the morning with a doctor friend of mine. We'd ask our wives 
how many fish they wanted before we went, how many hammour they 
would like to have, and what size. [laughter] They would say, 
"Well, yeah, and Matilda across the street, or Jane down across 
the alley, or so-and-so would like a couple of fish too if you 
have good luck." 

I remember one day we went in with twenty- six between ten 
and forty pounds of these beautiful hammour. They're groupers, 
and you can do anything with them. You can smoke them, they make 
wonderful smoked fish. Or you can broil them, bake them, fry 
them. They're all-purpose fish, but real good. 

Hicke: Marvelous. 

Owen: My son Tom, as a matter of fact, got interested in scuba diving, 
and when he'd come home from college, he had his own business on 
them. He would go around, and 1 remember a friend of mine said 
to him, "Look, Tom, we're having a party on Thursday night. Are 
you going out Thursday?" He said, "Well, I can." He said, 
"Well, what we'd prefer is one hammour of thirty to thirty- five 
pounds. If you can't do that, two of seventeen or eighteen 



387 



pounds." Tom said, "Well, I'll see what I can do, but I'll 
guarantee you, you'll have thirty-five pounds of good fish by 
Thursday, so don't worry." 

Tom went out, and he waited until he saw the right-sized 
fish, and hit the water and he just speared it, brought it 
home- -of course, he brought others; he had other customers, 
too- -but- - . 

Hicke: Would you spell that fish for me? 

Owen: [spells] It's a grouper. So we had all those kind of things we 
could do, plus there was a lot of bridge played. The women had 
their gardening groups, their women's club. They were very 
active, particularly in charities, to help the Palestinian 
refugees and that kind of thing. 

We had to make our own fun. We didn't have places to go out 
to dinner. In those days, up until the eighties, there really 
weren't many places you'd want to go to out to dinner; you'd 
prefer having it at home. You had houseboys from India or 
Pakistan mostly, and some from Yemen, some from Sri Lanka. You 
did have a movie theater in town. You could go to that. They 
didn't show first-run movies. As a matter of fact, they didn't 
show very many good movies at all it seemed to me, because the 
censors wouldn't let them through. Or they'd just butcher 
movies. They'd take out whole parts of them. But okay, if you 
wanted to see a movie, you could. But for the most part, you 
made your own fun. 

My wife Peggy was extremely active. She was sort of the 
mother confessor to all the other law wives , and the pal of those 
who were about her age, but all the younger women who kept coming 
in, they loved Peggy because she always took care of them. And 
then the same thing in Government Relations, so she was one girl 
who had the privilege of being the mother of both the Law 
Department and the Government Relations Department. 

Hicke: She had her hands full, I would say. 

Owen: And she had played golf since she was ten years old, so she loved 
the golf out there. I liked tennis better than golf, so we 
compromised: I played golf with her occasionally, and she played 
tennis with me occasionally. She learned tennis, and I learned 
golf. But I never did carry clubs around with me the way I'd 
carry a tennis racket with me anyplace I went in the world up 
until the last two or three years. 



388 



She was a very good writer, and she loved to throw parties. 
I should have mentioned, she also loved to play bridge and she 
was one of the two or three best women golfers in Arabia for 
years , and one of the two or three top bridge players there . 

She found time for everybody, but particularly what she 
liked was doing things like this: she would work with 
Dramaramco- -that was our theater production unit, put on one or 
two plays a year. We had wonderful stage facilities there. Put 
on things like "South Pacific" and "You Can't Take it With You." 
We had a lot of them. My daughter got interested in the stage 
through that. 

But outside of the Dramaramco stuff, Peggy liked to compose 
skits and things, so she was called on to put on parties for 
retirement parties like for Fred Davies when he and Amy retired. 
Several hundred people there, the company built a stage on our 
yard. We had a big yard, stage, and brought benches for people 
to sit on, and tents for food and so on. We did a number of 
those, but what Peggy would do, she would take musical comedy 
tunes and change the lyrics and make them fit. 

Hicke: Appropriate for Aramco. 

Owen: Appropriate for Aramco. And she did a lot of that. In the 

obituary that appeared for her in the Aramco Sun in December, 
much was said about her contributions in putting on the plays, 
writing lyrics, and that kind of thing. She loved to write: she 
wrote some interesting things. A lot about Arabia too; my 
daughter has collected all of those, and is going to put it all 
together for me one of these times. 

But when she would do these things, she'd get cooperation 
from everyone. Everyone would be helping. "What can I do?" And 
they'd have their fun that way; they'd make the fun. 

Hicke: That says a lot for her, but also for the whole spirit of the 
place, esprit de corps, you almost could say. 

Owen: Yes. I know during the course of our tenure there, she threw at 
least eight or ten major farewell parties, major events for 
people retiring or for other occasions, and just enjoyed it. And 
there was a lot of opportunity for charity work there. Kathleen 
Barger spearheaded a lot of that. Kath, being next-door 
neighbor, she and Peggy worked together on that a lot. 

The proof of the pudding is in the eating, and every one of 
my children wanted, after college and professional education, to 
go back to Saudi Arabia. 



389 



Hlcke: That's truly amazing. 

Owen: Only one has been able to do it, Tom, who's there now. David has 
a chance. First time they need a top person in contracting, I 
think he'll get the call. He's looking forward to that. Randa 
and Rick lost the chance because I was still general counsel when 
they became lawyers, couldn't take them. 

Hicke: Well, there is time. They may get there yet. 

Owen: Well--. So I guess that's about enough to say for a story there. 

Hicke: You've just been wonderful to give us so much information and to 
tell such marvelous stories. 

Owen: Do you think I covered as much as you wanted me to? 

Hicke: I don't know- -eventually when we get it transcribed, we'll look 
it over and see. 



[This material was added later.] 

In 1952 British embassy, someone had liquor and gave to a 
Saudi prince, ended in a shooting incident; Aziz was furious. 
Rentz and Owen had gone to Riyadh to see Yusef Yassim on boundary 
problem. They had dinner in his villa and were served cows' , 
goats', and camels' milk. 

They were told that Royal Decree # 79 banning liquor was 
being promulgated. Coming back on the plane, Owen asked if this 
were true; George said no (nobody trusted Yassim). There was 
then a boatload of beer from Holland, a three -months' allotment. 
They didn't get it released. 

RD # 79 banned importation, transportation, and sale of 
liquor and canceled all permits. Nothing was said about drinking 
it or manufacturing it. George Baroudy, expert on Shariah, wrote 
a confirming opinion given to Davies; George concluded they 
purposely left out manufacture to leave a loophole. Barger and 
Owen went to Riyadh and talked to Faisal. He said, "There is 
nothing about manufacture, but I can put it in in three seconds." 
In other words, if you're careful, we won't say anything. I 
[Owen] put nothing in writing but passed the word to lay low. We 
had every lawyer review Baroudy 's opinion; all but one concurred. 

Phil McConnell was in charge of operations before Arnot and 
Sullivan in Abqaiq; his wife was named Gertie. She collaborated 



389a 



with Peggy Owen on songs and musical productions. Phil wrote a 
song entitled "Royal Decree No. 73, we owe our salvation to 
thee . " 

Phil and Harry McDonald wrote a song "Midnight Train to 
Hofuf." Phil McConnell is in his 90s; lives in Ojai, CA at P.O. 
Box 823. 



Transcriber: Shannon Page 
Final Typist: Melody Meckfessel 



Regional Oral History Office University of California 

The Bancroft Library Berkeley, California 



American Perspectives of Aramco, the Saudi-Arabian Oil-Producing 

Company, 1930s to 1980s 



R. W. "Brock" Powers 
PETROLEUM GEOLOGIST TO VICE CHAIRMAN OF ARAMCO, 1947-1980 



Interviews Conducted by 

Carole Hicke 

in 1993 



Copyright 1995 by The Regents of the University of California 




Richard and Marte Powers, circa 1990. 



TABLE OF CONTENTS--R. W. "Brock" Powers 

Interview History 
Biographical Information 

I BACKGROUND 390 

II JOINING ARAMCO 392 

Recruited, 1947 392 

Working in Saudi Arabia 394 

Marriage 395 

Early Responsibilities as Surveyor 397 

Geologist on A Structure Drill Crew 399 

Military Service, Second Tour of Duty 402 

III A CAREER WITH ARAMCO 403 

Back To Saudi Arabia 403 

More Drilling 404 

Exploration Goal: Finding Where There Wasn't Any Oil 405 

The Geologists 407 

The Geology 409 

Anecdotes of Exploration Work: People and Events 411 

Abdulla Tariki 414 

Ahmed Zaki Yamani 415 

A Doctorate From Yale University 417 

New Management Assignments 423 

1967: Rock Wednesday 424 

The New York Office 429 

Vice President of Government Affairs 434 

Senior Vice President of Finance and Relations 435 

IV PRESIDENT OF ARAMCO, THEN VICE CHAIRMAN 436 

Handling the Embargo 436 

Participation Negotiations 439 

Expansion of Production in the 1970s 444 

Vice Chairman, 1978; Working with John Kelberer 449 

Recollections of Working with Frank Jungers 450 

Aramcons and the Corporate Culture 452 

Relationships Among Owners, Producers, and Competitors 458 



INTERVIEW HISTORY--R. W. "Brock" Powers 



The recollections of Brock Powers cover a wide range of subjects on 
the history of Aramco, from his early work on the seismograph crew to his 
term as president, then vice chairman. As a geologist, he joined the 
company in 1947 and went to Saudi Arabia as a member of the exploration 
team. He spent winters in a tent in the desert, summers in Dhahran 
writing up his notes. From there he went on to head various departments, 
including Internal Industrial Relations, Government Relations, Finance 
and Relations, even Medical, and was named president in 1973. He was in 
this position during the crucial years of the oil embargo, the enormous 
expansion of production, and the increasing participation in ownership by 
the Saudi Arabian Government. In 1978 he was appointed vice chairman; 
then in 1979 he retired. 

Powers was interviewed on May 4, 1993, in his Austin, Texas home. 
Mrs. Powers, Marte, joined the interview session occasionally, adding a 
few of her recollections. Powers reviewed the transcript and made a few 
changes. 



Carole Hicke 
Senior Editor 



September 1994 

Regional Oral History Office 

The Bancroft Library 

University of California, Berkeley 



Regional Oral History Office University of California 

Room 486 The Bancroft Library Berkeley, California 94720 

BIOGRAPHICAL INFORMATION 
(Please write clearly. Use black ink.) 
Your full name RlCHflgQ WAllAgE 



Date of birth H2O/Zf> Birthplace 

Father's full name \A/<Q LL fiCE 

Occupation /Vgg.'/3SgD Birthplace 

Mother's full name ("\OSfl E.L-ISABBTM rVtJL)R-<Z (Afc 

Occupation LJEC-fLASED Birthplace 

Your spouse 




Occupation 
Your children C^iDl^l 




Where did you grow up? 

Present community f\UUST"lN / | 



Education Pi . B MS . } PUD 



OccupationCs) 



Areas of expertise_ 



Other interests or activities 



Organizations in which you are active_ 



390 



I BACKGROUND 

[Date of Interview: May 4, 1993 ]##* 



Hicke: I'd just like to start this afternoon, if you would tell me 
please when and where you were born and grew up. 

Powers: I was born in Boise, Idaho, on January 20, 1926. I stayed in 
Boise until the age of sixteen, at which time I left to enter 
the service during World War II. 

Hicke: Were you drafted, or did you join? 
Powers: Oh, no, I joined at age sixteen. 

Hicke: I thought you said sixteen, but then I thought, my goodness. 
They don't let you in that early, do they? 

Powers: No, not unless you have the signature of your mother. The 

United States Marine Corps would accept you at that point in 
time if your mother would sign off on you at the age of sixteen. 
I had already been to Canada and joined the RCAF [Royal Canadian 
Air Force] , but I was booted unceremoniously one day, and came 
back down and joined the marine corps instead. 

Hicke: You were anxious to see the world? 

Powers: I was anxious to leave Boise, and anxious to get involved in the 
war. At that point in time, I intended to make the military my 
career. 

Hicke: And where were you sent during the war? 

Powers: South Pacific. 

Hicke: When did you finish your military service? 



1 This symbol, ##, indicates the beginning or end of a tape side, 
or an interruption in the tape recording. 



391 



Powers: I served just three years during World War II, and fortunately, 
the last two years of it, I was sent back to become an officer, 
and was sent to college. They wouldn't commission you in the 
marine corps unless you had at least two years of college, and 
then later they changed that to four years. So I finished my 
four years of college in two years and four months, under the 
expedited program they had during the war. 

Hicke : Where were you? 

Powers: University of Southern California. 



392 



II JOINING ARAMCO 



Recruited. 1947 



Hicke: And then what happened? 

Powers: I actually re-entered graduate school after I left the marine 
corps. It was then that the recruiter from Aramco came around 
to interview different students in the geologic profession for 
service in Arabia. 

Hicke: You had majored in geology as an undergraduate? 

Powers: Yes. 

Hicke: And you were in the advanced geology department? 

Powers: Yes, in the graduate school. I was going for a master's degree 
at that time. The famous legendary- -they call him- -Max Steineke 
came to interview everybody. 

Hicke: Max Steineke actually came? 

Powers: Yes. But I didn't go to the interview. I wasn't interested in 
going to Saudi Arabia. I was sitting around a conference table 
the following day, and some of the other students --we were in a 
seminar- -some of the other students started to talk about Max, 
and said, "Do you realize what they're offering as a starting 
salary in Saudi Arabia?" I said, "No, what are they offering?" 
"Three hundred and twenty-five dollars a month!" I said, 
"What?" because I'd been in the service when it was $21 a month, 
and then it went to $50 by the time I was out. 

I said, "Where do you go to sign up?" And of course, Max 
was back in San Francisco, where we were headquartered at the 
time. So I got the name of the recruiter there in Los Angeles 
that was handling the other students that they had agreed to 
hire. I went and saw him, and he turned out to be an old 



393 



military man, so we got along famously. He sent me up to see 
Max Steineke in San Francisco, which I did. 

And all the geological positions were filled. So Max said, 
"But wait a minute. I've got an opening position on a 
seismograph crew for a surveyor." 

Hicke: On a what crew? 

Powers: Seismograph, one that does the geophysical underground 

detection. He said, "Can you survey?" I said, "Of course I can 
survey." And of course, I didn't know a darn thing about it. 
But I figured for $325 a month, I could learn. 

So the minute I got back to SC, and during my processing 
period, I went out and got a book, and by the time I got off the 
airplane in Saudi Arabia, I knew how to survey. I spent the 
first year actually doing surveys on the seismograph crew. 

But the most amazing thing was when I was up in San 
Francisco, Max said, "Well, they offered $325 a month, but a 
general increase just came through; everybody's going to $350. 
We normally don't pay surveyors that much, but eventually you'll 
become a geologist anyway," so he raised my pay without having 
worked to $350. [laughs] Very, very fine gentleman. 

Hicke: Can you give me any other impressions of him? Obviously I don't 
have a lot of information on him. 

Powers: I didn't have that many impressions of him there, because I was 
just interviewed a few hours one afternoon up at 225 Bush 
Street, which was the San Francisco Socal [Standard Oil of 
California] headquarters. But I got to know Max fairly well 
later on, and he flew over about five or ten years later. I 
spent some time with him then. An ingenious man, absolutely- -he 
was a farm boy, just like I was, extremely rustic and very 
simple. He was a brilliant geologist, though. He was a major 
synthesizer of geology. He didn't know the name of one fossil 
from another, basically, but he sure knew how to use them. You 
don't have to know their names, they're long, Latin names, but 
he knew how to use them. 

Hicke: Isn't he the one that sat in Bahrain and saw the-- 
Powers: No, that was Fred Davies. 
Hicke: Oh, yes. 



394 



Powers: Fred Davies was a geologist prior to Max. Max died when he was 
chief geologist of Aramco. Fred Davies went on to become 
chairman of the board and chief executive officer. At that 
point in time, and in fact, up through Barger's time, every 
chief executive officer we had was a geologist: Norman Hardy, 
Fred Davies, and Tom Barger. 

That chain was broken by a very competent man, Bob 
Brougham, who was in the financial area. 

Hicke: What year was it you were hired? 

Powers: July, 1947. Went over with three classmates of mine from SC. 
Only one of them is still alive, and I still communicate with 
him. 

Hicke: Who is that? 

Powers: Walter Del Oro. He lives in Santa Rosa, California. 



Working in Saudi Arabia 



Hicke: What was the trip over like? 

Powers: Very interesting. It was the initial voyage of the new Camel, 
which was a DC- 6. We flew from New York to Gander, and then 
from Gander to Lisbon. We overnighted in Lisbon at the Esterilo 
Hotel. I had never seen anything like it, of course. [laughs] 
A grand, European hotel. Then we took the plane the next day 
from Lisbon to Dhahran. It was a full transoceanic plane. They 
had had a Camel before that, but it was a DC-4, and this one was 
a real upgraded model of that. 

We landed, and nobody knew we were coming. Which is not 
unusual. So we got off at the airport, they didn't know which 
district to send us to, so finally they said, "Geologist? All 
right. You go to Abqaiq." Well, we weren't supposed to go to 
Abqaiq; we were supposed to go to Ras Tanura. 

So, myself and my three colleagues spent four wonderful 
days playing pool and sitting around the rec hall in Abqaiq, 
waiting to be found. [laughter] And we finally did get found, 
and the Abqaiq geologist came over and got us. We ended up 
going back to Ras Tanura. 



395 



The most interesting part of that trip, though, was we got 
on the bus at the Dhahran airport to go to Abqaiq, and it's 
usually a one-hour trip. It took over six hours. We burned out 
the engine on our car, after we burned out the engine on the 
bus. It was in July and blistering hot, so my friends and I 
climbed up on a big sand dune and watched the few cars that were 
there go by, and waited until somebody came by to get us. That 
was a car who also lost its engine. [laughs] It took us a 
little over six hours to make that trip. That's my first day in 
Saudi Arabia. 

Hicke: Welcome! [laughter] 

Powers: They didn't have any place for us to sleep, really. They 

finally put us in some transient bunk areas. We enjoyed the 
first four days there until we had to go to work in Ras Tanura. 

Hicke: Were they just getting so many people in that they weren't 
prepared, or they just had no idea you were coming? 

Powers: In that day and age, communications were nowhere near what they 
are now. So there was no way of telephoning in; there was a 
telex, but it was intermittent because it passed through Europe; 
and so the main communication in this area was written letters. 
And so a lot of times the letter saying, "We just hired so-and- 
so and he's on the way, please expect him," got there a week or 
two after he did. That's basically the reason. So we didn't get 
telephone communication in there for many years thereafter, 
which was a blessing, really. 

Hicke: The phone wasn't ringing! 

Powers: It didn't ring, but once we got the phones established in there, 
why, then we started getting calls from all the parent companies 
and everything like that in the middle of our weekend. It made 
life a good deal more complicated. 



Marriage 



Hicke: Well, I was just about to ask about when you got married, and 
here comes Marte. Maybe you could just sit down and tell me 
that story. 

Marte: We met on New Year's Eve. 

Hicke: It was in California, I think you--? 



396 

Marte: Yes. It was very interesting. If you really want this on the 
tape- - 

Hicke : Sure . 

Marte: It was supposed to be just for people that didn't have dates, 
and this friend that I worked with, she and her sister lived 
with another girl, had an apartment together. They asked me if 
I would come over. They had a few kids from- -young people- -from 
USC coming over. 

So I went over, I was going to stay the night. Apparently, 
Brock was just going to go into a movie, and they caught him, 
they said, "Brock, what do you want to go to a movie for on New 
Year's Eve?" He said, "Well, there's nothing else to do." 

They said, "Well, come on to the party," and obviously 
Brock said, "No, I wasn't invited," and they said they'd call. 
After they hung up, they turned to me and they said- -now, this 
is the other girl, the two sisters and the other girl whose name 
was Audrey. They said, "Audrey was brought up by her 
grandparents, nothing's ever happened to her. We'd really like 
to get this Brock- -he's nice and tall- -and Audrey together. So 
just leave him alone, Marte." 

So when he walked in the door, I looked at him and I 
thought, well Audrey can have him. [laughter] Every time I'd 
sit down, Brock would come over and sit down next to me, and 
we'd talk. It went on. New Years 's Eve came, when 12:00 came, 
the two tallest people in the room, I was at one side and Brock 
was at the other. Everybody was kissing, so we met in the 
middle, and we haven't been separated since. We were married 
twenty days later, which turned out to be his twenty- fifth 
birthday. 

Hicke: What year is this now? 

Marte: Fifty-one. It was the New Year's at the end of '51. 

Hicke: Okay, well I guess we did skip ahead. I wasn't sure of the date 
there . Thanks . 

Marte: I hope that's all right! I tried to make it as fast as I could. 
[Marte leaves] 



397 



Early Responsibilities as Surveyor 



Hicke: Okay, let's back up to 1947, and what were your first 
responsibilities? 

Powers: Surveyor on a seismograph crew. 

Hicke: Can you describe kind of a routine day on the job? 

Powers: Well, what it is, is basically you take the campsite out where 
it's supposed to be located, you find where you're supposed to 
be on the ground- - 

Hicke: Oh, you were laying out new buildings? 

Powers: Not new buildings, just the campsite, which were trailers, or at 
that point in time they were strictly tents. Tents, and some 
rolling stock, but not a lot. We had a kitchen, but even our 
eating hall was a tent, and our living quarters were all tents. 
I would go out to where the camp was supposed to go and tell 
them to drive a stake in the ground. Then they'd come along and 
set up camp, and then I'd lay out the lines we were supposed to 
shoot and map on the seismograph survey and take the elevation 
of each stake, and keep track of where I was on the desert 
floor. Then they'd come along and shoot powder charges that 
give a reflection off the various layers of rock in the earth, 
and then they'd set up and map them from that. But I spent the 
first year just telling them where they were and where they had 
to go. 

Hicke: How far along was the port? 

Powers: The port itself of Ras Tanura was active, and they were loading 
tankers there and everything by the time I got there . But we 
were inland quite a ways in the interior of Saudi Arabia. We 
were mapping new country that had never been mapped before, as 
far as the subsurface was concerned. Years before, they had 
done all the surface mapping. That's the first thing they do in 
a geological survey: you map the rocks that are exposed at the 
surface. You make all the maps- -that was Max Steineke, Tom 
Barger, and Burt Beverly and those people, all of whom were at 
that point in time my bosses. 

But then you follow along and you try to measure the 
structure of the rocks below the surface, and that's where you 
use a seismograph that works just as if it were earthquake 
readings, shock waves coming up. What you've done is create an 



398 



artificial shock wave; it goes down, bounces off a layer of rock 
and comes back, and by measuring the time it takes for that to 
get back, as you go along, you can tell where it slopes this 
way, this way, or forms a potential oil-bearing formation, 
things of that nature . 

So that's what we were doing the first year that I was 
there: I was doing the actual survey work, just as if I was 
laying out a road for the highway department in Arizona or 
anything like that. 

Hicke: Well, not quite. [laughter] Must have been pretty hot work for 
one thing, at least part of the year. 

Powers: Well, it was, but at that point in time, we didn't work during 
the summer months. We came in and worked on all of our field 
notes. We went out in September, about September first --it was 
still hot, don't get me wrong- -and came in just in time for 
Christmas, and went out on the second of January, and then came 
in again, in April and May. That way we were working a solid 
nine months a year in the field with a week's break. 

Then we took three months off in Ras Tanura where we worked 
up and formally recorded our field notes. You see, when I signed 
up, it was for a three -year stint. That was the standard 
contract. Shortly after we got there, they went to a two-and-a- 
half -year stint, and by the time I was ready to end my first 
contract, it had dropped to twenty- four months. 

Hicke: Why were these--? 

Powers: Well, because three years was just too long. That was just like 
the military and everything else, and it was just too long to be 
away from family and home. A lot of people just weren't 
prepared for it. 

In the meantime, on the three -year stint, every year you 
were supposed to have two weeks off in Europe or Africa or 
someplace, wherever you chose to go. But most of us took it, 
because the company plane took us there, in Asmara, which is in 
Eritrea, which is now part of Ethiopia. 

Hicke: So you took that trip? 
Powers: I took that trip, yes. 
Hicke: What was that like? 



399 



Powers: In a DC-3, bouncing in the hot summer- -because that's the only 

time we could go, you see, because of the field work schedule we 
had- -and on the return trip we were packed among the vegetables. 
Going over, they flew just people over, but coming back, they 
flew fresh vegetables back, too. Boy, it was a rough trip, I'll 
tell you. You had to get up to over 10,000 feet, and there was 
no pressurization, just to land at Asmara, because it was about 
9,000 or 10,000 feet itself, right on the coast of the Red Sea. 

Hicke: What did you do after you got there? 

Powers: It was an Italian colony, and we could go to a nice restaurant- - 
there were a lot of nice restaurants. It was occupied by the 
British at that point in time, the British army was controlling 
it. And I took sightseeing trips to all the major battlefields 
where battles had taken place between the British and the 
Italians around there, if you could call them major 
battlefields, because they weren't on the scale of anything else 
in World War II. But a lot of people got hurt in them. 

Hicke: What did you do, then, at the end of that first year? 

Powers: Well, that was the end of the first year, when I went to 

Eritrea, right, because I went over there in July and stayed 
full circle that year, the first year I went to Eritrea. The 
second year, I went back to go to graduate school. I left 
Aramco in 1949. I wanted to go on and finish my degree. 

But on that vacation I went to Edinburgh and went to one of 
the very first of the Edinburgh music festivals, and just had a 
lovely time, because I like classical music a lot. I like most 
music, but classical particularly. A lot of famous people were 
performing up there then. Lasted about fifteen, twenty days, 
and it was a delight. I didn't have any accommodations, and I 
managed to get taken on in a private home and lived there. 

Hicke: Did you see the military tatoo at night at Edinburgh Castle? 
Powers: I absolutely sure did. Oh, yes, that was absolutely impressive. 



Geologist on A Structure Drill Crev 



Hicke: But the second year, you were not doing seismographic work? 

Powers: No, that year I was promoted from a surveyor to a geologist. 

Then I was assigned to a structure drill crew. That was a good 



400 



Hicke: 
Powers : 



Hicke: 



deal more civilized, and still in tents and everything, but we 
were poking 1,000- and 2,000-foot holes in the ground just to 
map the subsurface structure. We'd look at the rocks and tell 
what each layer of rocks was doing what as we went along. 

Saudi Arabia is pretty unique in that if you drill 1,000 to 
2,000 feet deep, you pretty much reflect the same structure 
you're going to see at depth. In other words, if you've got a 
hump like this at 1,000 or 2,000 feet, it just persists on down 
to 8,000 and 10,000 feet, which is where the oil-bearing layers 
are. So you actually make a map that's not quite as sharp a 
relief as you get when you get deeper, because it seems to go-- 
at 1,000 feet it may have a small hump like this. And as it 
goes down, just keeps magnifying- - 

It gets to be more of a-- 

It gets more relief, yes. It gets to be a bigger trap for oil. 
So then you drill on those shallow surfaces. So you can drill a 
1,000- to 2,000-foot hole for almost nothing, compared to 
drilling the 8,000- to 10,000-foot hole. So we drilled hundreds 
and hundreds of those structure drill holes throughout Saudi 
Arabia. 



What was that like? 
dunes? 



Did you go out and spend weeks in the sand 



Powers: Yes. At that point in time, we had a six-week-out, three-day- 

off schedule. We'd go in on the DC- 3, and we'd rotate people in 
and out. They were there six weeks. Now, it's about a week out 
and a week in. 



Hicke: Is that one of those crews that got the strawberry shortcake and 
all that? 

Powers: [laughs] Well, that came along infrequently, but that was the 
year that we got some Re di- Whip. [laughter] That was used to 
cover the strawberry shortcake with. 

One time, my real top boss came in, and two of the drillers 
were engaged in a Redi-Whip fight. And Redi-Whip never came 
back to that camp. [laughter] 

Hicke: Well, what did you find? 

Powers: Yes, we found a lot of drillable structures. As time went on, 
we found- -we really found the northern end of Ghawar Field, 
which is the biggest oil field in the world. 



401 



Hicke: In this first year that you were--? 

Powers: Well, I wasn't on that crew. Another structure drill crew did, 
and we traded off people. Well, I could go to their crew once 
in a while, particularly if they needed a relief assignment when 
they had somebody ill or something like that. I did go to that 
crew, but I was not on it when they were drilling at what they 
call Ain Dar. That is the northern end of the Ghawar structure, 
and that's how it was discovered; through structure drill. 
Abqaiq was also discovered through structure drilling, but it 
had been discovered before I got there. 

Hicke : So you were in on the beginning of that one . 

Powers: Yes. Ain Dar was discovered, if I remember correctly, in 1950. 

Hicke: Anything else about that second year that you recall? 

Powers: No, except I made up my mind as it came to a close that I 

probably wasn't going to make a career in Aramco or anything 
like that, and I remember leaving Arabia, the day I was headed 
for Camp Dhahran to catch the airplane, I waved goodbye to the 
main feature of the landscape, which was a hill there called 
Jebel Berri just outside of Jubail, it was near Jubail. Jubail 
at that time was a block wide and a block long, and that was it. 

But I waved goodbye to Jebel Berri and said, "I'll never 
see you again," and of course, I saw it again many, many times, 
[laughs] I remember climbing up to the top of Jebel Berri when 
I was doing my survey work and looking down on that sleepy Arab 
town. What an amazing change it took. There was an old 
Portuguese tower that had been built there for observation when 
the Portuguese had been on the east coast. They had been a 
significant power. 

Hicke: Portuguese? 

Powers: Yes. The biggest area that there's still some remains of is the 
fort on Tarut Island. It's got a lot of antiquities there, and 
they've done excavations there. They know that it's been 
occupied for three to four thousand years. Geoffrey Bibby did 
some work there. He's the man who wrote Looking for Dilmun. He 
was British, but he worked for the Danish Museum. 



402 



Military Service. Second Tour of Duty 



Hicke: 
Powers ; 



Hicke: 
Powers 

Hicke: 
Powers : 



Hicke: 
Powers : 



So you went back to USC? 

Went back, went right back to USC to get my master's, and no 
sooner had I got set up there than I got called back into the 
marine corps, got my papers for the Korean War. They called 
everybody; they got over 95 percent of the former officers back. 

You were in the reserves? 

Yes. They didn't care whether they were lame, halt, or blind, 
they got them back. And particularly with my military 
specialty, which was infantry officer at that time. 



How long were in the marines this time? 
married sometime in there. 



And meanwhile you got 



Meanwhile I got married, before- -actually, I had already 
received my call-up when I met Marte, but I wasn't going to be 
called up until about February something, and so we got married 
and drove back across country and met her folks, and my mother, 
and reported in at Quantico, Virginia, where I knew essentially 
everybody that was reporting there from World War II. 

Where were you stationed this time? 

This time I lucked out. I was a geologist, and the seven 
geologists- -there were 252 men in my class- -the seven geologists 
were the only ones that didn't end up in Korea within weeks. 
The only specialty that they exempted was geologist, because 
they were desperate for photo interpreters. So they just took 
geologists and said they were a special case. Of course, we 
hadn't done any photo interpretation. Didn't make any 
difference to the marine corps. 

So all the lawyers, all the others started coming back in 
body bags within a week or two --it was a terrible slaughter. 
But the seven of us were sent to train in photo interpretation 
there at Anacostia in Maryland, and Marte and I started our 
career in the marine corps right there after we got out of 
Quantico. Because of the point system that was in effect for 
what you had done in World War II, they gave you credit as to 
when they discharged you after the Korean War was over. So I 
was in the first batch discharged out of there. So we spent 
fourteen months was all. 



403 



III A CAREER WITH ARAMCO 



Back To Saudi Arabia 



Powers: At that time then Marte was pregnant, so I signed on with 
Amerado Petroleum, and missed Saudi Arabia like heck. 

Hicke: You missed Saudi Arabia? 

Powers: Yes. The child died within five or six days after it was born. 
So then I went back to New York with Marte, and we talked to the 
man who had been my boss in Arabia. He said, "Sure, we'll hire 
you." So I signed up again to go back. 

Hicke: Who was that man? 

Powers: Dick Bramkamp. He was chief geologist before me. I replaced 
him many years later as chief geologist. 

Hicke: What year are we in, '52? 
Powers: We're in '52, yes. 



Powers: I left Marte in Los Angeles, and at that point in time, the 
waiting period for family housing was more than two years. 

Hicke: Did you get any extra points for having been there before? 

Powers: No. I had severed all my relationship with them. But they gave 
me my old badge number back, which was helpful. [laughter] 

Hicke: I want to just interrupt you for a second and ask you what was 
it about Saudi Arabia that you missed. 

Powers: It was so much like the military, I liked it. I liked the 
people, the camaraderie, everything was there. And having 



404 



worked six months for Amerado, I knew I really wasn't interested 
in making a career in the United States, because everything is 
so diffuse in an American setup, where everybody goes home, they 
have different interests at night, they do everything different, 
and meet in the office next day- -which is fine, but it wasn't 
for me. I enjoyed the close relationships that we established 
in Saudi Arabia, and all of them were my personal friends, even 
though I'd only been there two years. When I got back, 
essentially all of them were still there, plus some new ones. 
It was very nice going back. 

Hicke: Homecoming. 

Powers: Yes. But it was tough too, because who wants to look forward to 
a two-year separation from your wife? 

Hicke: Oh, my, was that necessary? 

Powers: And that's what was guaranteed. There wasn't any chance. 

Well, I got over there and I worked hard, did a lot of 
things, and got a couple of good promotions, which carried 
housing points with them. Marte was there within eleven months, 
so it made a lot of difference. I'm not sure if I would have 
made the two years, but at that point in time, I really got with 
my career, and it worked out very well. 



More Drilling 



Hicke: What did you start out doing? 

Powers: I started out doing that structure drill work again, and within 
a couple of years, I was head of it. We had four parties in the 
field, and lots of rolling stock, lots of geologists, lots of 
people, and drillers plus geologists, mechanics- -everybody had 
their own mechanics, and the whole thing, to keep it moving. 
Because by then, everything was trailers, air-conditioned 
trailers. We'd long since done away with the tents. 

But the tents I didn't mind at all. Everybody had a 
private tent, and it made a difference. Whereas a trailer, 
unless you were the geologist or the chief drilling engineer, 
you had to share two or three or four people to a room in a 
[trailer]. I had had that in the service. [laughs] 

Hicke : Did you ask for your tent back? 



405 



Powers: No, no. Tents were rough. There was no way to shield yourself 
when the wind cane hard, because you could nail them down, and I 
don't care how you nailed them down, they just blew off and were 
down the valley, and you were chasing them, and oil drums, and 
everything, two or three times a year. 



Exploration Goal: Finding Where There Wasn't Anv Oil 



Hicke: Can you tell me sort of in general what the company's 
exploration policy or overall goals were at this time? 

Powers: At that time, we had found enormous quantities of oil. They 

really weren't interested in finding more oil at that point in 
time. They were interested in mapping where oil wasn't. Part 
of the reason was that we had an agreement with the Saudi 
government that required us to relinquish so much acreage every 
five years back to the Saudi government. So we were exploring 
for acreage to give back to the Saudi government- -the obverse 
side of the coin is that you're keeping the good acreage just by 
knowing some of it. So we set out deliberately to learn as much 
as we could about the bad parts of the concession. 

Now they're drilling all they can; it's a totally different 
philosophy. But at that point in time, the majors weren't 
really interested in spending a lot of money developing new oil, 
because they had oil that was coming out of the ground at less 
than ten cents a barrel anyway, and you can't bring new oil on 
that cheaply. 

So we did everything we could to search out good 
relinquishment areas. 

Hicke: Where did you start? On the edges of the concession? 

Powers: No, we went right up through the heartland of the concession, 

just to make sure that between Ghawar and the Khurais structure, 
you see, mapped all that to make sure, and all the Rub' Al Khali 
we mapped- -everything that was within our original concession 
area. See, the large parts of Saudi Arabia were never in our 
concession area. 

Hicke: You had the Eastern Province? 

Powers: No. Well, basically we had the Eastern Province, but [looking 
at map] the original concession area was about 381,000 square 
miles. That covered right through here, around the edge of the 



406 



Ad Dahna' that marked the western limit of It, clear around 
here, through all of this, [pointing to map] and not the United 
Arab Emirates, and then on up here to Selwa. 

Hlcke: So most of the pink section of the map. 

Powers: Most of the pink section of the map here, the Empty Quarter and 
from the Dahnas eastward were part of the concession. Now 
they're drilling all through here, you see, and discovering some 
oil. But we never had that under concession, we never did any 
exploration work there at all. 

We mapped all of this and this and this in order --see, this 
was 381,000 square miles. We had to make a major relinquishment 
when the relinquishment agreement was signed to relinquish all 
but 125,000 square miles. So the 250,000 went back. 

Hicke: When was this, 1950? 

Powers: Oh, no, no. It was much later than that. See, it was 1963 that 
we gave back all but 125,000 square miles. 

Hicke: But before that, you were giving back small pieces? 

Powers: No, we didn't really have a relinquishment agreement per se . We 
had a small one. We had one that gave back some small pieces, 
yes, we did. But it was really formalized and stepped up In 
March of 1963. 

Hicke: So in the fifties, you weren't- - 

Powers : We were looking for bad acreage , because we wanted to know what 
we were going to have to give back eventually. 

Hicke: You knew that you were going to have to give some back. 

Powers: Oh, we knew we were going to- -at some point in time, we were 
going to be faced with relinquishing large bundles of land. 

Hicke: And they would take back just odd pieces here and there? 

Powers: Well, we had- -this is something you can ask Bill Owen when you 

interview him, because he'll remember it precisely- -we had small 
relinquishment obligations prior to the 1963 agreement, but I 
don't remember what they were, because the one I was involved In 
and the one- -in fact, in which I selected the acreage that went 
back. 



407 



Hicke: But you were seeing this coming, and so you were trying to 
figure out what you didn't want. 

Powers: Yes. That had been all through that period, we were searching 
for bad acreage, at the same time realizing- -you see, we were 
drilling wells, deep wells and everything, but we were 
deliberately drilling them off structure, just to prove up what 
the stratigraphy or the rock units were below. So we drilled a 
number of wells before the 1963 relinquishment that clearly 
were- -we called them stratigraphic wells, not potential oil 
wells. 

Hicke: Did you find any oil, by mistake? 

Powers: No, no, we never found oil by mistake, but we found lots of oil 
with- -you see, all through that period, we were just drilling up 
Ghawar Field and extending it south. We made one find after 
another there, and that was such a bonanza that it really didn't 
pay to go out and compete with ourselves in trying to develop 
other fields. Because we knew if we found oil, we'd have to 
develop it and that costs capital dollars, and lots of them. 

Hicke: So you were looking in places where you hoped not to find oil? 

Powers: Yes, in large part. 

Hicke: And in fact, that's what you found: no oil. 

Powers: That's right. And in fact- -well, that's a later story. I'll 
get into that later. 

Hicke: So we're in the 1950s generally. 

Powers: Right. But that was a period in which we were just literally 

mapping the concession, and trying to locate what areas we would 
eventually give away and have to give back. 



The Geologists 



Hicke: Who was the head geologist? 

Powers: In the 1950s, it was --well, the head geologist was Max Steineke 
until 1948 or '49. Then the head geologist was Dick Bramkamp, 
and he lasted until 1959. Then, before he died, he had gotten 
me to take a leave of absence, an educational leave of absence, 
to go back to Yale University to get my Ph.D. They would not 



408 



Hicke : 
Powers : 



Hicke: 
Powers ; 



Marte: 
Powers : 

Hicke: 
Powers : 
Hicke : 
Powers: 



put a man in that position that didn't have a Ph.D. as chief 
geologist. So-- 

And they wanted you for that position? 

Yes. And the selection was made before I left Arabia. We 
brought in two chief geologists from outside, from the parent 
companies, to hold on while I was back at Yale, and then when I 
got my graduate degree, I went back to Arabia as chief 
geologist. But it was 1959 that Dick died and I entered Yale. 
It was 1961 that I went back and assumed the position of chief 
geologist, and I only held it for a few months, because then I 
was promoted to manager of exploration, which I held for a few 
weeks, because then they were putting me on all kinds of outside 
assignments . 

Such as what? 

Outside training assignments- -assistant district manager of 
Abqaiq-- that's where I met Frank [Jungers] - -and Frank was acting 
district manager, Don Fate was actual district manager, so I 
went down when Don Fate went on vacation. Frank Jungers 
replaced Don Fate, and I replaced Frank Jungers as district 
manager there. 



But that's getting way ahead of the story. 



That was quite a way ahead. 

Yes, but she was asking me who was chief geologist during this 
period, and it was Dick Bramkamp from 1948 to 1959. That's when 
he died. 

How many people were in the geology department at the time? 
It varied enormously, but we had twenty- five geologists. 
And then these seismic crews besides? 

Well, a seismic crew seldom had a geologist on it. You see, I 
served as a surveyor on there. You have what you call a 
geophysicist on that crew, and they're far more mathematically 
oriented in dealing with seismology, they're more into physics 
by quite a bit. But on those, almost all of those were contract 
crews. We got those from Geophysical Services, Incorporated, by 
and large at that point in time. Those were contract crews, but 
there would be ten Americans on one of those crews . On our 
structure drill crews, there would be ten Americans, roughly, is 
all. But only two geologists would be on. The others would be 



409 



radio repairmen, or mechanics to keep the generators running and 
the cars running and all of our rigs running, and drillers. We 
were then drilling around the clock. When we first got there, 
we only drilled two shifts, two eight-hour shifts, and shut down 
at night. But that's just too much of a bad use of equipment, 
so we took on the stateside standard, which is to drill around 
the clock, 365 days a year. 

Hicke: So for about ten years, you were exploring? 

Powers: Ten years. Well, no, because- -let me be a little more precise 
on that. I went in 1950, so until 1960 --yes, for ten years I 
was exploring, exactly. And then after I went back as chief 
geologist, I started on a series of training assignments that 
kept me out of geology for months on end. I was at the refinery 
for a long time, and I was in Abqaiq for a long time, and I was 
in the New York office for a year. So I was in the exploration 
game fully the two years I was there from 1947 to '49, then when 
I went back in '51 or '52 to the time 1 got to be chief 
geologist, which would be '61. 

Hicke: Who picked you out for the Yale studies? 
Powers: Dick Bramkamp really did. Yes, he did it. 
Marte: I wish he was here so that you could talk to him. 

Powers: Yes, what a grand gentleman. One of the most brilliant men I 

ever knew. Clearly in the genius class. Not because he picked 
me- - [laughter] 

Marte: We loved him. 

Powers: I was best man at his wedding. 



The Geology 



Hicke: Well, before we move on, let me just ask you what else we need 
to talk about in the exploration period. 

Powers: I'm trying to think. The big things were getting ready for 
relinquishment, and making sure you didn't give up anything 
good, just making absolutely certain that we didn't give up 
anything good. That was the whole purpose of the exploration 
department at that point in time, was to make sure that what we 
gave away was bad. 



410 



Hicke: This is probably a silly question, but I have this picture of 
sand dunes that shift around all the time. Was that a problem 
for you? 

Powers: No. The sand dunes move, there's no doubt about it, but they 
move over periods of years. So that's not a problem. You can 
see the sand dunes shift, but the concession edge was marked by 
the edge of this [looking at map] , which is a mobile sand dune 
belt, the Ad Dahna' . 

Hicke: That pink or peach section of the map? 

Powers: Yes. This belt here. And we could see over the years from 

aerial photos that these dunes were moving a little bit back and 
forth, and changing the concession boundaries as a result, but 
it was just a couple of hundred feet at a time over a ten-, 
fifteen-year period, so it wasn't enough to be- -you couldn't 
notice it on the ground. You had to do it by aerial photos, and 
elapsed time over quite a long time. 

And these dunes down in here are a totally different kind. 
Hicke: In the Empty Quarter. 

Powers: Yes. They're really mountains. They get 600, 700 feet high. A 
lot of them are just isolated on a flat silt floor. You can't 
go over them except in special equipment, which we finally 
developed, to go over them, because you had to lay out the 
seismic lines fairly straight, you see, and you couldn't do it 
down there so-- 

Marte: Too bad you can't go in a plane over it because- - 
Powers: Oh, it's a fascinating area. 

Marte: It looks like you're on Mars or something, there are these pools 
of water with these mountains of red sand-- 

Powers: But they aren't water, it's silt flats. But it's just a flat 
silt floor. 

Marte: But it looks blue, it's-- 

Powers: Well, it is, gray-blue. 

Hicke: Why is it blue? 

Powers: Because of the clay in it, clay content. 



411 



Marte: The red is only on the surface? 

Powers: It's just a flat surface that the sand dunes are superimposed 
on. 

Hicke: Like somebody came along and built a little sand castle or 
something. 

Powers: Exactly, only these are huge. They're sometimes a couple of 
miles across, and around at the base, and go up to 600 or 700 
feet. On those are cusps and things just like you see on 
regular dune areas. It's one of the most fantastic places I 
think on the face of the earth. I was in the first crew in 1950 
that went down there to map that . 

Marte: That's the color of the red sand, only when it's lying there, 

it's even redder. And it's a fine silt on top, you just have to 
skim it off the top. 

Hicke: Is the red in it iron ore or--? 

Powers: It would be iron staining on the sand grains. 



Anecdotes of Exploration Work: People and Events 



Hicke: 
Powers 



Hicke: 
Powers : 



Hicke: 
Powers: 



I wanted to ask you, did you have any Arab employees? 

Yes, lots of Arab employees, but most of them were laborers in 
the camp. We didn't have any drillers but rig hands, lots of 
rig hands that handled the pipe and things like this, the drill 
pipe. Drivers, cooks, mechanics, and then we always had a 
contingent of soldiers from the central government that went 
along or-- 

National guard, or the-- 

No, we never got a national guard. They were from the local 
emirates. In other words, the governor of the Eastern 
Province's constabulary, and he would go with us to make sure 
that we didn't run into any trouble. 

State troopers. 

State troopers in essence. They'd come very close to being the 
equivalent to state troopers in terms of the geographic 
relationship. 



412 



Hicke: Would you have to go and visit the amir? 

Powers: Oh, yes. But that came later. I didn't get involved with 
government people until much later in my career. 

Hicke: Okay, we'll get to that at that point, then. 

Powers: But I do remember one episode. My first year I was there, I was 
driving across the desert all by myself, and suddenly I looked 
across and here's this huge white tent. There weren't any roads 
where I was. Some guy's out there waving a flag, trying to get 
me to come over. 

So I go over, and it's one of the local amirs inviting me 
in for coffee and tea and milk, and to eat with him, dates and 
everything. Wouldn't do that I would drive by, you know, you've 
got to come over. They're so hospitable. This is one of the 
things that's amazing. He didn't know me from Adam, and he 
spoke no English, and at that point in time I spoke essentially 
no Arabic, which is still the case. [laughs] 

Hicke: So a lot of bowing, smiling? 

Powers: Yes, and I ate everything they put before me, and a lot of it I 
didn't find too appetizing, but that didn't make any difference. 
But they constantly would try to get you in to entertain you if 
that would- -and if the local amir or any- -"amir" is a word 
that's used just like "chief" in the United States. Chief of 
police, chief of detectives, chief of fire department, chief 
executive off icer- -goes all the way from the top to the bottom. 

Hicke: Oh, that's a good insight, thank you. 

Powers: And so you have a local amir, and the amir's the guy, the top 
soldier of the five soldiers you've got in the camp. He's the 
amir of those groups. He's called the amir, and it goes all the 
way up to the --and those that have HRH, His Royal Highness, 
after his name like members of the royal family, are amirs. So 
it goes across the whole spectrum. Use the word chief in place, 
and you'll see it. Chief inspector here in the United States, 
and it can be chief inspector in the telephone department or 
anyplace. 

Hicke: He's amir. 

Powers : Yes . 

Hicke: Oh, that's very interesting. 



413 



Powers: But hospitality was- -that's one thing I did learn very early on, 
and I couldn't get stuck, I couldn't do anything, but what 
sooner or later some Saudi would either show up on his camel or 
his truck to try and help me get unstuck or help me if I was 
broken down. 

Hicke: Did you often drive by yourself out there? 

Powers: Oh, all the time. In fact, you seldom drove with anybody. 

Hicke: How often did you get stuck or have a breakdown? 

Powers: I got stuck only once that I wasn't able to get myself out. 

That was after Marte was there, and I was reported missing that 
night, because I didn't get to camp. I got caught in this mud 
flat. I was so far from any shore area that it was all soft 
from the rain. So I Just pulled out my cot and went to sleep 
there . 

But when I woke up in the morning, that was probably the 
most dicey situation I faced in Saudi Arabia. This guy came up 
on a camel, and he wanted to know if I had any guns in the car. 
I told him, "Yes, I have a gun," which I didn't, but I thought 
it would be best to tell him. He said, "Well, I want to see 
it," and I said, "No, no way. The soldiers wouldn't approve of 
that . " 

He was clearly off his rocker, and he finally took his 
shotgun and put it right in my face. He started shouting at me, 
and I thought, "He's going to pull that trigger if I'm not real 
careful, and if I make any sudden moves." Finally, the rest of 
the caravan comes along, and pat him on the head, and they 
consider him pretty holy, you know, if he's possessed. He's 
possessed, and they took him off, but boy, that was a dicey 
moment, I'll tell you, because he could have --he had no reason 
to shoot me, but he had no reason not to either, because there 
was nothing in his world that was going to be retribution in any 
sense of the word. And he was so far out of it, it didn't make 
any difference. He was possessed by j inns , as they told me. 

Hicke: And how did you get out of the mud flat? 

Powers: I finally, when it got light enough, after this guy had gone, I 
finally was able to get over to an area and I found some rocks. 
I got them under the tire, and I kept jacking the tires up and 
putting more and more rocks --just got to the area where the silt 
flat ended, and then I drove on in to camp, and got on the radio 
and told them to tell Marte that I was all right. 



414 



Hicke: What were you driving? 

Powers: It was a sedan. We had Chevrolet sedans at that point in time. 

Hicke: Four wheel drive? 

Powers: No, just balloon tires, big balloon tires. You depended more on 
flotation than you did power. [laughter] 

Hicke: What were you driving about by yourself for? 

Powers: I was going from town to camp, to one of the outlying field 

camps. We drove continuously from Dhahran to there, unless we 
were going on days off, in which case we often took the 
airplane. But a lot of times--! drove in from practically every 
part of the kingdom to Dhahran at one point or another. 

Hicke: What kind of an airplane would they use to fly around? 

Powers: Well, the early ones were the DC- 3s, which were the ones out of 
World War II, the old work horse. Used to fly over the Burma 
hills and things like that, just two engine- - 

Hicke: Like the Flying Tigers? 

Powers: The Flying Tigers wouldn't have use those except to fly in 
supplies. They were strictly cargo. 

Hicke: Anything else about the fifties? 
Powers: Oh, I'm trying to think. 



Abdulla Tariki 



Hicke: Any other people that we should hear about? 

Powers: No, because at that point in time, you see, I wasn't involved--! 
had a run-in very early on in 1949, as a matter of fact, with 
Abdullah Tariki. 

Hicke: Oh, you did? 

Powers: Yes, he came to visit our structure drill camp. 

Hicke: What was he like? 



415 



Powers: He was minister of petroleum at the time. Very arrogant, very 
supercilious, almost insulting. He came to visit, and Mike 
Wanty and I , Mike Wanty was - - 

Hicke: Mike? 

Powers: Mike Wanty, [spells], he's alive and well in Fresno, I think. 
He was my boss at that time. There were two geologists on a 
structure drill camp, the senior geologist and the junior 
geologist, of which I was the one. Mike and I took Abdullah 
Tariki around. He wanted to know, "Well, what do you do in 
these structure drill camps?" so we took him through the whole 
thing. He really wasn'the was so anti- American, and it 
showed. [laughs] He left, he spent maybe two, three hours with 
us , and drove off . 

But I remember what Mike Wanty said afterwards. He said, 
"Did you notice how close his eyes were together? I never 
trusted anybody whose eyes are that close together." [laughter] 
But Abdullah Tariki's eyes were --he had some sort of a birth 
defect in which one eye was slightly crossed relative to the 
other one, and that's why Mike made this statement. 

Hicke: When you said you had a run-in with him, you didn't mean an 
altercation? 

Powers: Oh, no, no. We knew better than to even- -no way. But we'd have 
had it from everybody that way, both the Saudi government and 
the company. Oh no, we were on our best behavior. And we 
passed it off, and that was the end of it. We were too junior 
to have any real opinions at that point in time. That was my 
one and only time I ever met Abdullah Tariki. But he got- -I 
can't remember the year he got displaced, but it was I think 
around 1953, something like that. 



Ahmed Zaki YamaniM 



Hicke: We just sort of figured out it was 1955 that-- 

Powers: Well, it was roughly that. I wouldn't pin it although I do 
know that- -I'm figuring backwards from the fact that [Ahmed 
Zaki] Yamani was minister of petroleum for twenty- four years, 

Hicke: Okay. So during the fifties, did you meet Yamani? 



416 



Powers: I could have met him at some event- -yes, I would have met him 
then, because that was the period he was interested in 
establishing the University of Minerals and Petroleum there in 
Dhahran, and he was interested in geologists, and I think it was 
then that Bob Brougham took me over one time to the guest house 
to meet him and to answer some questions on geology. So that's 
when I would have met him, but it was a totally informal 
discussion, and it wouldn't have registered with him, and only 
registers a little bit with me now. I remember that Bob 
Brougham was there, and Yamani. He asked me a couple of 
questions about how the university was doing. That was really 
his baby; he put that whole university together. And to do it 
outside the basic governmental educational system was a real 
maneuver. 

Hicke: How was it outside of the governmental system? 

Powers: Well, because it fell under the minister of petroleum and not 
the minister of education. 

Hicke: He used his funds which he got from Aramco? 

Powers: Yes, which was all the source of funds of the kingdom. There 
weren't any other real sources of funds. 

Hicke: Yes, but somehow or other, he had access to those funds? 

Powers: Well, I'm trying to think of all those years, how the funds 

flowed. I can't remember. See, the funds flowed from Aramco 
through the ministry of petroleum, who set all the rules that 
governed the way those funds were handled from Aramco to the 
Saudi government. They never got into the minister of finance's 
hands until they reached the treasurer, and they went backward. 
And of course, the minister of finance was infuriated that the 
funds were going not to the minister of finance or into the 
treasury from Aramco. We paid all the money to the minister of 
petroleum. He got his hands on them first, and that was a bone 
of contention for years between Mohammed Abu Al Khayl , who was 
the minister of finance and Yamani, who was minister of 
petroleum. And we answered directly to Yamani, you see, not to 
anybody else. And the college of petroleum and minerals was set 
up outside the ministry of education. 

Hicke: With these funds that he was handling? 

Powers: With these funds, he was able to set it up. Don't get me wrong, 
he had King Faisal's staunch backing on all this, and he always 
managed to outflank everybody that was giving him problems. 
Because there's no doubt about it, Yamani was King Faisal's 



417 



favorite, clearly, as far as the council of ministers. But I 
met Yamani once in the fifties, I'm sure. 

Hicke: Veil, I appreciate that explanation. Somebody told me he didn't 
have to go cap in hand to the king to ask for money, and that 
was one source of his power, so that explains it. 

Powers: No, he did not. When it came to anything dealing with Aramco, 
we dealt almost exclusively with the minister of petroleum, 
although we had dealings with the minister of finance, things 
like that. We did not send him a check. [laughs] 



A Doctorate From Yale University 



Hicke: Okay, well let's just move on to Yale University. What did you 
learn there that you needed to be head geologist, chief 
geologist? 

Powers: Essentially nothing. [laughter] The reason I went there was 
because Dick Bramkamp felt very strongly that unless you had a 
Ph.D., you shouldn't be chief geologist of the world's largest 
oil-producing company. Steineke wasn't; he was a brilliant 
geologist. Didn't make any difference whether he had a Ph.D. or 
not. 

I learned a tremendous amount at Yale University, don't get 
me wrong, I did. I had been at USC, which was basically a nuts 
and bolts university as far as the oil patch was concerned. I 
went to Yale, which had never seen an oil geologist in its life, 
basically. Yale trains two types of people: they train 
professors to go out and teach other people geology, or they go 
to the United States Geological Survey, and they head the U.S. 
Geological Survey. Director after director after director are 
all Yale graduates, have been and- -I don't know, they probably 
aren't now, but Peter Flawn was a Yale graduate, went on to 
become director of USGS, and then president of University of 
Texas. And so it goes. 

So I was a unique individual there. Number one, at first, 
clearly they were suspicious of anybody who represented 
industry, because they didn't have any real brush with industry. 
We got along famously by the time it was all over. I had been 
out of college for thirteen years when I went back. All the 
other guys were hotshots, graduate students out of Columbia, 
cream of the crop. Took sixteen graduate students that year, 
biggest group in geology they've ever taken. 



418 



Hicke: I have to back up and ask you why you picked Yale, then? 

Powers: [laughs] Dick Bramkamp picked Yale, because he thought it was 
probably the best university there was in geology. He was 
probably right. But he also had an in there. The dean of 
graduate studies in geology- -each department had somebody who 
was the director of the graduate students or the selection 
process or whatever it is. I can't remember what his title was, 
but he was the director of graduate studies or something like 
that there. He was a professor of vertebrate paleontology, 
Joseph T. Gregory. 

He had met Dick Bramkamp. 
Marte: Well, Dick Bramkamp introduced- - 

Powers: Well, Dick Bramkamp introduced him and his wife, and so they had 
become close personal friends. Dick said, "Not only do I want 
you to go to Yale because of the academic qualifications there, 
but I'd like to have you go to Yale because I have an in with 
this director of graduate studies. I think we can use the way 
in after having been out of school thirteen years and 
everything." I'm not sure that my undergraduate grades would 
have gotten me into Yale either, in all fairness. That's a 
truthful statement. 

So I went back at Dick's behest and met Joseph Gregory and 
spent an afternoon with him, and he said, "We'll see you in 
May." I said, "What?" He said, "You're accepted." And he saw 
me on the bus back to the train station in New Haven. I said, 
"Well, that's great. I didn't expect--." But at that point in 
time, you had to pass five examinations on entrance. One in two 
languages, French and German, one in mineralogy, one in 
petrology, and one in fossil identification. Those were given 
to every graduate student that went in. Yale does not have a 
master's program. It only wants people to come and get Ph.D.s. 
They do not encourage anybody to come for a master's degree. 

Which was fine by me , but you have to take this for the 
Ph.D. course work. So I knew German. I didn't have any problem 
with that. French, I had no other language, and I had to take 
these other three exams on entrance. So I started studying- -you 
said how did I happen to go to Yale, well that's the reason I 
went to Yale, because Dick had an entree, and his feeling for 
it. 

So then once Gregory told me I was accepted, and I had 
nothing formal to base that on- -I told Marte, "I hope he doesn't 
have a heart attack between now and May!" [laughter] 



419 



Hicke: You didn't have it in writing. 

Powers: I didn't have it in writing at all, and I didn't meet anybody 

else there. So I started studying, and I had about four or five 
months before school opened- - 

Marte: He studied every lunch hour, and when he got home, and of 

course, we have two kids at this point- -and he studied around 
the clock. Syd Bowers would come over, and he'd walk with me. 
I can remember that, just to get out of the house after the kids 
were asleep so that you could get your work done. 

Powers: Yes. I spent eight hours every night for three months studying 
French and German and then a little brush-up in mineralogy, 
paleontology, and everything. At the end of the third month, I 
knew my German was good. All you have to do is read, translate 
a technical book in your field for the test. You don't have to 
write it, speak it. I had not a word of French, to my 
knowledge . 

So I spent the next three months, six hours on French and 
two hours on German. By the time I got through, I could read 
French as well as I could German. I didn't know the 
pronunciation of one word, but I knew all the grammar, and all-- 
what this word meant, what the tense was, everything like that-- 
the gender. I knew them all at the end of that six months. 

I went back, and I was the only guy out of that whole 
group, except for Clark Burchfiel, that passed all five tests on 
the first go round. 

Hicke: Is that right? Oh, my! 
Marte: Whatever happened to Clark? 

Powers: Oh, he's a top professor at M.I.T. [Massachusetts Institute of 
Technology] now. Has been for years. 

Hicke: That's quite an accomplishment. 

Powers: At my age it was, and particularly against all these other guys. 
But I knew that if I didn't get those hurdles behind me the 
first time, and I got into the full graduate course work and 
everything else, that it wasn't going to be any easier. Those 
hurdles get harder and harder, and that's what kills a lot of 
people. You've got to get those done just right on schedule. 
If you don't, a lot of them just- -they' re killers, after that. 



Marte : 



You were older than a lot of the other students. 



420 



Powers: Well, I was the grandfather of the lot. [laughter] 

Marte: Some of them weren' t- -well, the one that didn't pass that first 
time, you know, said his job had brought him there, you just sat 
him down and said, "This is the way you study, and you do it 
every night. You don't cram for an exam, you study all the way 
along. " 

Powers : Yes , he got himself through by my advice . 

Hicke: But a little clue like that as to how to get through was 
certainly helpful. 

Powers: Yes, it just required discipline, that's all. 

Hicke: So you learned other things besides just the actual oil geology? 

Powers: Oh, gee! They don't even have a course in oil geology at Yale. 

Hicke: You could have taught it probably! 

Powers: I could have; I was asked to give some lectures and things like 
that. I declined, and I wanted to decline, because I didn't 
want to get started down that road when I was just a student, 
and that's where I wanted to stay. 

Marte: They did write very glowing letters back to Arabia saying that 
they had learned- - 

Powers: Well, my advisor did. 

Marte: --a tremendous amount by having Brock in the class. 

Powers: Yes, they were very gracious. So I managed to finish up 

everything. I took all the course work for the Ph.D. from 
ground zero, because none of the stuff from USC was transferred 
as far as the graduate work, because it was all interrupted when 
I got called back to the service. I finished up and was out of 
there in just two years. 

But fortunately, you see, in the two summers that I was 
there, I was able to work on my dissertation. My dissertation 
subject was approved within six months to a year after I got 
there, and I had all the materials and everything, and worked 
both summers on it, and that was the end of it. 



Hicke: 



What did you write on? 



421 



Powers: Upper Jurassic carbonate rocks of Saudi Arabia. And the company 
had thousands of thin sections of the rocks. It was all on a 
study that they wanted to do in any event, and they just very 
generously let me do it, because we were going to do it anyway. 

Hicke: So that benefited the company. 

Powers: It benefited the company, it benefited me, and it benefited 

Yale, because it got them some new microscopes that they were 
never going to get or anything like that. 

Hicke: Great. That's a win-win situation. 
Powers: It was. It was a win-win situation. 

Marte: It was another one of those absolutely wonderful experiences 
that we had with Aramco. 

Powers: Well, what did I learn to help me in my job? Very, very little 
except in my dealings with people. That was the main thing. 
Because the course work was classical geology in every sense of 
the word. We studied how these rocks were named in the Alps and 
things like this, and that somebody had done this and that it 
was truly a classical orientation of geology. Things I'd never 
heard of in USC and that probably USC professors never paid any 
attention to, because it's an economically oriented geology 
department. This is geology for geology's sake. 

One thing I must admit though, all the books that I studied 
at SC were written by professors at Yale! [laughs] And I met 
most of them, those that hadn't died. And the guy that I was 
most impressed with at SC in historical geology was my lead 
professor at Yale. He retired at age seventy-four then, just 
last- -I was there the last year he was there. 

Hicke: Who was that? 

Powers: Carl 0. Dunbar. [spells] What a gentleman, what a fine 
gentleman. 

Hicke: And back to Saudi Arabia, and they clearly marked you out for-- 

Powers: Chief geologist, yes. 

Hicke: But for more than that, because you didn't stay there. 

Powers: I didn't stay there any length of time. When I got back to 
Dhahran, the first week that I was back, the Society of 
Petroleum Engineers, or SEPM, Society of Engineers Petroleum and 



422 



Mineralogists, whatever, asked me to give a talk. They wanted 
me to give a talk, a presentation, on my dissertation, which was 
of course right down everybody's alley there in Saudi Arabia. 

So I did, and the only meeting that he ever attendedand I 
know this, that he ever attended- -Paul Arnot came to see how I 
did. Because he had been a big help in getting me the 
educational leave and everything else, and he was one of the two 
top dogs in the company at that time, you see. He and Brougham 
shared the power at that point in time. 

Hicke: So he was probably one who picked you out-- 

Powers: Oh, yes, without Paul, I'd have never gone anywhere. And Bob 
Brougham, same thing. Barger was still there, but he had gone 
by the time I got back, I think. I can't remember any more. 

Marte: No-- 

Powers: Well, you'd remember, 1 wouldn't, because I just don't remember. 
My chronological clock is pretty lousy. But at any rate, he 
came. 

Marte: Yes, 1 think so. I think Cy Hardy was- -I don't remember. 
Hicke: It's not important. 

Powers: It's not important, but Paul Arnot attended that meeting, and 

before the question time and everything, he got up and left. He 
told me he enjoyed the presentation, and by that time, I had it 
so well memorized, because after I left Yale, I was asked to 
give that talk in Denver at the AAPG [American Association of 
Petroleum Geologists] convention, and then up in Edmonton, I 
gave it up there --a number of places. But it was an interesting 
subject, and it was very timely at that point in time. Nowadays 
it's pretty well discovered and everything, but it was 
interesting. 

So I got through my orals, didn't miss those, and I got my 
comps, and I graduated with high honors, far different than when 
I went through undergraduate work. 

Hicke: Good discipline. 

Powers: It was. That's it, I had matured. Clearly made a big 
difference. 



Hicke : 



Well, it helps. It's not all of it, but it helps. 



423 



Powers : 



Yes. Big difference. 



New Management Assignments 



Hicke: Okay, so you got back, and you were chief geologist for a period 
of a few months, and what did-- 

Powers: Basically chief geologist for a period of a few months, and then 
I started getting one assignment after another, and then it was 
very quickly- -I've got something here that would tell me, but I 
don't think I need to for that kind of detail. I've got the 
company record on it. But I went to Abqaiq, and then the 
exploration manager quit. He was the guy that was my direct 
boss when I was chief geologist. He went back because some 
member of his family got cancer, and he went back to take over 
the family business, and so there I am, another break. It 
didn't pay to be in front of me, I'll tell you. [laughter] 
Dick Bramkarap died of cancer, and that was my first boss, big 
boss. Then Jack went back and darned if he didn't die very 
soon. But that didn't- -but he had to go back because of cancer 
in his family. 

Marte: That was terrible. 

Hicke: They didn't want to see you coming! 

Powers: [laughter] Exactly. So within I'd say six months to nine 

months after I became chief geologist, Jack had to leave for his 

family. 

Hicke: Jack who? 

Powers: Jack Reid, [spells]. So I was promoted immediately to manager 
of exploration. I was a junior geologist, but I didn't get to 
serve in that for any length of time. I was in and out of it 
for months while I was on other assignments in the company. 

Hicke: These were other assignments that were training you to just keep 
moving along? 

Powers: Exactly. And then in- -well- - 
Hicke: Yes, let's go through that. 

Powers: [looks at papers] Okay. When I got back there, yes, in '61, 

while I was in New York still and working on my dissertation, I 
was promoted to senior geologist, then when I went back in '61, 



424 



chief geologist. Then in- -this does not tell --then I was gone 
the bulk of the time between '61 and '65, when I was in 
accounting. I went through all of accounting, every department, 
sat down with everybody in accounting and worked there for a 
couple of years as a staffer. I was in the budget department, 
the analytical department, everything else. 

Then I resumed the position of chief geologist in '65. I 
was gone for four years. Then in August 1965, this is when 
within two months, I became acting manager. That would have 
been when Jack would have left. Then, I stayed manager in '66. 
Then I was acting district manager of Abqaiq in '66. I became 
manager of exploration again in '66. I was then acting 
assistant general manager of Government Relations in '67. 



Hicke: Oh, now that was a whole new area for you. 



1967 : Rock Wednesday 



Powers: That was a whole new area, brand new, and that was when- -I was 
sitting there running the Government Relations Department, 
because it was lunch hour, and I had stayed, I can't remember 
for what, when Rock Wednesday came. 

Hicke: 1967. 

Powers: 1967. All the other people who were my bosses were all home at 
lunch, and they couldn't get back. And there's poor Brock, left 
in the driver's seat, trying to handle Government Affairs, about 
which I knew essentially nothing. 

Hicke: What was happening, phone calls? 

Powers: A riot, right in our back yard. They were burning cars outside 
my window. [laughs] 

Hicke: I wasn't sure--I thought you meant the start of the war. 

Powers: Oh, no. 

Hicke: This was the strike? 

Powers: This was the riot right there out of-- 

Marte: Didn't you get Tom Goddard on the phone and you told him not to 
hang up? 



425 



Powers: Yes, that's when I got Tom Goddard on the phone and I said, 

"Tom, you get down to the amir." He was our representative to 
the amir. I said, "Get down there, and get some soldiers back 
here. This is going to turn out worse than we think." So Tom 
got down to the ami rate, and lo and behold, he was able to get 
on the phone and call me back. I said, "Don't hang up. I want 
to be sure that everything I say goes right on to the amir." 
The amir was sitting there right next to him. I said, "We need 
such and such here, and we need them right away." He said well, 
he was going to get General Ghanadili up there, and he's going 
to send out the amirate troops, and he's going to get the army 
troops there as quick as he can. 

So I stayed on the line. In the meantime, I've got no 
direction whatever, because Dan Sullivan, Paul Arnot, everybody 
was gone. Bob Brougham- -they were all home for lunch, the whole 
kit and kaboodle. They hadn't activated the emergency groups 
either- -we had a special emergency plan if something like this 
ever happened. Nobody could get to the emergency room! 

So within thirty minutes, the soldiers showed up, they 
cleared it out, but in the meantime we had to keep patrols going 
and everything like that. So they never activated the emergency 
group, they just turned it all over to me and said, "Handle it." 
And I did for the next three or four days, and I didn't get 
sleep one --because the phone rang right off the hook for three 
straight nights. Paul said, "You're doing fine. We're not 
going to interfere." I remember that. [laughter] 

Hicke: Interfere! 

Powers: Because see, at that point in time, I was in charge of all the 

Government Affairs representatives to the government, and that's 
why they left me in charge, and that's when I was sitting in 
George Mandis' slot for another one of these training 
assignments that I got trapped in. 

But don't get me wrong: every one of those training 
assignments was a real learning process. I learned to have 
respect for a lot of people I used to think were just hangers-on 
and didn't contribute very much to the oil business and to the 
company. I learned a totally different slant. Particularly 
when I was in accounting for so long. God, I used to think 
accountants were - - [ laughs ] 

Marte : If you want a little aside on that: Brock said, "I want you and 
the kids to leave." And I said no, I wasn't going to leave 
until I had to leave. So I put my only piece of good jewelry 
on, and I packed a bag for myself, and I packed a bag for my 



426 



daughter, the size that she could carry if we had to walk to the 
airport, and one for my son, which was the size that he could 
carry. So we were ready in case anything happened and we had to 
go- 

It was oh, I think a good month after all of this before I 
unpacked those bags. I unpacked Dirk's and I thought, "Gee, 
Marte, you were thinking about this." I had really done a good 
job of packing of only the essentials. I unpacked my 
daughter's, and I was really- -when 1 got to mine, it was all 
shoes. [laughter] Literally, all shoes! 

Hicke: That's great, that's a wonderful story. 

Marte: I guess I thought I could buy anything else, but I could never 
find shoes. 

Hicke: That's probably right, too. 

Marte: No silver, no picture albums, no nothing but shoes. 

Hicke: Oh, that's terrific. Good story. What were you doing all this 
time? Just sitting in the house and shaking and quaking, 
probably? 

Marte: I knew something was in the air. The air vibrated. It was a 
very strange sensation. The kids went off to school in the 
morning, Brock went off to work, and probably there were chants. 
I don't know what the noise was, but there was also a vibration 
through the air. It was just a storm coming up. But you could 
feel it. You knew that you were right at the peak of something, 
and when Brock didn't show up for lunch, and the kids didn't 
show up for lunch, and it was-- 

Powers: We should have left it that way. 

Marte: But then the phone rang about the time lunch would have been 
over, and Brock said, "Get out of the house, go down to the 
school gymnasium, and stay there. I can't explain," and he hung 
up. I turned to the house cleaner and I said, "You can leave 
and go back to your place, or you can come with me, or you can 
stay here. I don't think there's going to be any power." He 
was Yemenese. I just left the house. I got in the car, and I 
got over there. Everybody was at the gymnasium. We stayed 
there all afternoon, and then pretty soon they came in and 
announced that there was an all-clear, and we went home. 

Then we began to discuss things, and someone told my 
daughter that what they would do was let all the horses out of 



427 



the horse farms and let them out into the desert, and they could 
forage for themselves. That's what they were going to do with 
their animals. I point blank told her, I said, "Those animals 
have never been on their own. They couldn't find food. They'd 
die a horrible--" 



Marte: Then they'd lead a terrible life on the desert. The only thing 
they could do would be to put them to sleep. I said, "The same 
with our pets: if we can't take our pets with us, we just--" 

Powers: There's nothing there that would- -nobody would pick them up and 
take care of them. 

Marte: Without the garbage cans --the Americans no longer had garbage 

cans out there --there wouldn't have been garbage to forage for, 
and water. It would have been a disaster for animals to be just 
left and abandoned, domestic animals can't make it. She cried 
for a little while, but she began to realize that that was the 
realistic thing, that you had to handle it responsibly. You 
couldn't just abandon them But we never had to leave. 

Hicke: How long did this go on? 

Powers: It lasted roughly a week total. 

Marte: A lot of the people left. 

Powers: They went to Rome, and places like that. 

Marte: Vacation in Capri on Aramco for free; what they didn't know was 
it wasn't free. Is that right? 

Powers: I don't recall that line. I recall the phrase, but I don't 
recall whether it was for free. I don't know how we finally 
resolved all of that. Well, it had to be for free: you 
couldn' t- - 

Marte: They got their trip free, but they-- 

Powers: They had to pay for their hotel and stuff. 

Marte: And they didn't realize that. 

Hicke: Well, how long were you in Government Relations? 



428 



Powers: Just long enough to decide that wasn't my bag. [laughs] Just 
long enough to know what I was in for; it would have been 
roughly two or three months . 

Marte: It was interesting, any kind of a riot like that, if they had 

been ant i- American, anti-Aramco, they would have been pulling in 
people, and there would have been thousands going through that 
camp. But the number of people didn't really- - 

Powers: Well, the bulk of them were right from the university, Yamani 
University, down the road, who were young Turks from Saudi 
Arabia at the time. In all honesty, it was a half-hearted riot. 
Number one, they didn't know how to riot to start with, because 
they had such- -there' s so much discipline in Saudi Arabia. 
Number two, their hearts just weren't in it really, because all 
they did was knock down a fence, and they didn't even know how 
to do that, really, very well. They finally got it down by all 
of them jumping on it instead of- -and they had a truck there 
they could have rolled right over it. Just things like that. 

At any rate, that lasted a short time. But I must admit it 
was one of the most interesting periods of my career at Aramco, 
that riot week, because of just being left in charge of the 
whole situation, and being in charge of our contacts with the 
government at the time. There was no other contact with the 
government at that point, except through Tom Goddard and Mike 
Ameen in Riyadh. 

Hicke: Who was the amir? 

Powers: Abdul Mucksin Bin Jaluwi 

Hicke: Oh, he's the one you mentioned before. 

Powers: Yes. [laughs] 

Marte: Are you going to talk to Tom Goddard? 

Hicke: He's not on my list right now. 

Marte: He's up in the Seattle area. 

Powers: Where were we? 

Hicke: We were in Government Relations with the line open to the amir. 

Powers: Right, and the army showed up, and General Ghanadili was in 

charge, and he fired his pistol in the air half a dozen times 
and everybody scattered like scared rabbits, and that was the 



429 



end of that riot. He brought enough firepower with him, as far 
as the others --the people that were rioting didn't have any 
weapons at all, you see. So he brought sufficient firepower to 
take care of anything, and that was it. 

Hicke: He obviously didn't exactly have a trained anti-riot crew; he'd 
probably never seen a riot. 

Powers: He did not. They had never- -that was unheard of in Saudi 

Arabia. So he got them all back out on the other side of the 
fence, and they arrested some of them. What they did, they just 
went and questioned them later on, and they didn't bother 
arresting anybody then. They weren't going to go anywhere. 
They got them, the main ringleaders. It was just a bunch of 
amateurs, just kids out for a lark, basically, and that was the 
end of it. 

So that was how I spent -- 
Marte: Wasn't Baba Hattab put in the jail? 

Powers: He was. Like I say, they got him, but they did that at a little 
later stage. They picked him up at their leisure. 

Hicke: That's an interesting way to handle it. 

Powers: It is. It's a luxury that most countries don't have. I'm not 

sure it would be quite the same now, because certainly there's a 
lot more sophistication there now than there was then. 

But I stayed in training programs for years, really. I 
ended up in a concentrated one in- -well, let me see. In the 
meantime, in 1964, I went to Harvard [Business School] to their 
advanced management program there. I was the youngest one in my 
class, and the youngest one that Aramco had ever sent there. 



The New York Office 



Powers: Then, we got back from that, and I went on more training 
assignments, and then I ended up in the New York office. 
Harvard was in 1964, and then I went back to the New York 
office. All this was preparatory to going back to the New York 
office to work with the owner companies for a year, and that 
happened in 1969 . 



430 



I was looking at my notes to make sure my chronology was 
right. 

Hicke: Now, what did you do during the year in New York? 
Powers: I liaisoned with the shareholder representatives. 
Hicke: Who were their representatives? 

Powers: The four shareholders- -well --it was handled on two levels. One, 
the governmental arrangements and budget items, things like 
that, were handled by the general manager of the New York 
office , who was a permanent fixture there , and then I handled 
all the technical contacts with the technical people, the four 
U.S. shareholder companies. That's how we made the decisions in 
the companies. 

I ran what they called the study group. The study group 
studied all the data that everybody wanted studied, just like a 
Congressional staff, and then you came up with position papers, 
and then your principals that worked on the general manger's 
level made the decision as to what they wanted to do on it. 

Hicke: And do you recall who was on the study group? 

Powers: Oh, yes, but not completely. What I recall is who was on the 

management team. While I didn't liaison with them very much and 
worked mainly with their technical advisors, but I knew where 
the power lay, and it was pretty obvious where you had to work, 
what kind of slant you had to put on things to get something 
done. They changed the study group members fairly frequently, 
with the exception of Exxon, who kept about the same guy on for 
years and years and years. That was Doug McConnell, he was 
always on, and he's still alive, he's in his eighties, and he 
lives in San Francisco. 

Then Roy Murdoch was Mobil, Reginald Armfield was Socal, 
and Jim Brazell was Texaco. Now, the top dogs who also served 
in large part as the Executive Committee and the Ancom, the 
Agreements and Negotiations Committee, were Harvey Cash for 
Texaco, George Piercy for Exxon, George Parkhurst for Chevron, 
and Henry Moses for Mobil. They had the dual role of being the 
top representatives on our board, as well as on the Executive 
Committee, which made all the decisions, in all fairness. The 
board didn't make any real decisions at all. 

They also, without the chief executive officer of Aramco-- 
served on the Ancom. The Executive Committee included our chief 
executive officer, so there were five on the Executive Committee 



431 



and four on the Ancom group. Really, the Executive Committee 
and the Ancom, that's who ran the company. That's where the 
whole thing started. 

When we started out over there, you see, we really didn't 
have any top Aramco management in the field in Dhahran at all. 

Hicke: You mean when the company started out its-- 

Powers: Up until about 1953 or so, all the power resided in New York 

City. Then, the king asked that the top man be moved to Saudi 
Arabia, and they moved him to Saudi Arabia- -the top Aramco man. 
Still not the Executive Committee or the Ancom group. They 
stayed in New York. The guy that was in charge of Saudi Arabia 
was a fine gentleman named McPherson, and he ran Aramco. He was 
a Scotsman and became a naturalized American citizen. James 
McPherson. First week I got there, they were taking everyone in 
front of him in the administration building, and he lectured me 
plus the three of my comrades plus all the other people who had 
come on that plane flight that we went on, he lectured us on the 
requirements for good citizenship in Saudi Arabia. 

Hicke: That was important. 

Powers: It was important to him, and he had that Scottish accent, you 
know. He was a fine man. 

Hicke: Did anything exciting happen in New York? 

Powers: Oh, yes. That's when the oil business went berserk. That was 
the year that- -I had the obligation in my junior position of 
getting what they called nominations from the four U.S. 
shareholders. They were extremely secretive about what each one 
nominated. It was a corporate secret. Mobil wouldn't tell 
Chevron and Chevron wouldn't tell- -because it was competitive. 

Hicke: Nominations for what? 

Powers: Offtake, liftings [amount of oil production to be required]. So 
you get nominations for each quarter, for a year in advance, for 
a couple of years in advance, and then depending on- -and I was 
the only one that had the total figure . See , I'd talk to each 
guy separately on the phone at his office, and he'd tell me what 
they were going to nominate for this month, the next month, the 
next month, the next year, all this, you see, their best 
estimate of what they were going to lift. And then I'd add them 
all up, and that would trigger whatever facilities we were going 
to build, you see, because we had to have the facilities to 
deliver that amount of oil. 



432 



Hlcke: 
Powers : 



Powers : 



Hicke: 
Powers : 

Hlcke: 
Powers 



So I'm sitting there one month- -and I can't remember which 
one, it was in '69 or '70- -and I couldn't believe it. The 
nominations were right through the roof. They were 
astronomical, compared to the base we were operating on. 



You were looking at the oil boom right there. 



So 



That was it, and that was the first indication we had of it. 
I looked at the numbers and I said, "Something's wrong. I've 
got the wrong numbers." So I called everybody back and they all 
confirmed them, and that's what they wanted. 

Well, what it meant was billions of dollars- -see, we were 
loafing along with a $40 million capital budget, year after year 
after year. That's what we were spending on new facilities. 
Suddenly, it was in the billions that we would have to build to 
make these deliveries, and they're going to have to approve 
these. So I got all the numbers together, and at the next 
meeting we had with the executive committee, I laid them out. 
They all looked at each other- - [laughs] And of course, they're 
all really getting the same message, each of us reflecting the 
same set of data. 

So really, this was the first hint we had of it. I laid out 
what it meant in terms of cost that was going to come about as a 
result of this, and do you guys really want us to gear up to do 
this? It means hiring lots of people, it means building lots of 
facilities that we don't have on the ground now, it means a 
capital budget of billions of dollars a year. And they all 
agreed they were going to go ahead with it, because they were 
very parsimonious, and they weren't going to build anything that 
they didn't need. 

So that was the big one, and I was right in there on the 
ground floor on that one . 

Your accounting came in a little handy there, probably. 

Everything came in handy in that thing, in understanding what 
we're going to need. 

And so all of the shareholder companies also found out what 
everybody else had nominated? 

They didn't know the numbers that each guy put in, but they knew 
they had to be big. They were quadrupled or quintupled or 
something like that. I do not remember the numbers, but they 
were big, and they were just unheard of. Like I say, from $40 
million to put in the facilities to billions. 



433 



Hicke: They had to approve that? 

Powers: They had to approve the billions, you're darn right. 

Hicke: So they had to know that-- 

Powers: They each had to approve their own proportionate share of the 
capital expenditures. 

Hicke: That was pretty interesting. 

Powers: It was. And so you asked if anything interesting happened; yes, 
it sure did. But also, something else toward the end that was 
far less critical: 1 was promoted to vice president while I was 
in New York City, which was unheard of, because they usually 
brought the fellows back from that job, they had used that job 
as a training spot for people that they really planned to put in 
top management in Aramco. I was the first one out of that group 
that was promoted to vice president there. Don't get me wrong: 
the others always got to be vice presidents after they came back 
to Arabia and everything, and moved on up. But they made me 
vice president while I was still there, which was very 
gratifying. 

Hicke: Indeed. You were obviously holding down an important position 
and doing good work. 

Powers: It was an important position, and the fellow that supervised me 
on it, Joe Johnston, clearly a controversial figure in terms of 
his relationships with people, I found to be an extraordinarily 
competent man. I always enjoyed my relationship with him. 

Hicke: Was he president at that time? 

Powers: No. By that time, he would have been a senior vice president. 
When I went there, he was general manager and vice president, 
then they promoted him to senior vice president when they made 
some people clearly his junior senior vice presidents in the 
field. He served as a sounding board all for owner company 
people, who trusted him implicitly. He was neutral with all of 
them, but he'd chew on them and make them do things that they 
often didn't want to do, but for their own good, to get 
something moving. He wasn't afraid to tackle them, and they all 
respected him and liked him a lot. He's still alive, and living 
in La Jolla or someplace like that in southern California. 

No, I think Joe would have been their first choice to have 
been a president at one point in time or a chairman of the board 
if he hadn't had medical problems with his wife. His wife could 



434 



not go to the field at all, and he couldn't live in Saudi 
Arabia. But my own feeling, intuitive feeling, was that they 
clearly would have chosen him to be president over several 
others that eventually did become president. They had such an 
enormous trust in him. 

Hicke: Did we cover then New York? 

Powers: Yes, we're pretty much through. That was the most important 
thing that happened in New York. I hated New York, but that 
didn't make any difference. 

Hicke: Living there, you mean. 

Powers: I just hated living there. It was comfortable, because the 

company owned a house out in Scarsdale that went with the job. 
Joe wouldn't spend a nickel on it to help keep it up, and so 
Marte was just lacking in accommodations. But for a year --see, 
it was usually only for a year. That's all I stayed there, 
twelve months. And God, was I ever glad to get back to 
civilization! [laughter] 



Vice President of Government Affairs 



Hicke: That's great. And what did you do on your return? 

Powers: Oh, what did I do? I went to more assignments. I was very 
quickly made vice president of Government Affairs, which was 
totally outside of my area of interest and area of competence, 
really. 

Hicke: How does that differ from Government Relations? 
Powers: Well, I was only in that for three months. 
Hicke: I mean as to the work. 

Powers: Oh, that's the guy that directed deals with Yamani and deals 

with the Saudi government, and formulates the company's policy 
on government affairs, you see, and what we're going to do on 
given issues and things of that nature. If there was anybody 
ill-prepared for that job, I was number one. 



Hicke: 



They didn't think so. 



435 



Powers: Well, they didn't think so, but they were wrong, in all honesty. 
I handled it, but by temperament, I'm just not- -I deal better 
with operations aspects of things. Government Affairs isn't 
dealing with rocks or minerals or anything like that, it's 
dealing with people, and you're constantly trying to read 
somebody's mind. And I'm very bad at that. And it's constantly 
speaking in nuances, and I'm very bad at that. I've got to say 
things pretty well straight out. 

Now, Frank Jungers was excellent at it. Frank Jungers was 
super at it. He could read Yamani's mind and think what Yamani 
was thinking, and things like that, something I never had the 
talent for. But Frank was in the job before I was, and then I 
moved in right behind him. 



Senior Vice President of Finance and Relations 



Powers: But that was the next job I had, and then within a year or two 
after that, they made me senior vice president of Finance and 
Relations. So there I am in the other area, [laughing] 

Hicke: You must know the company inside out and upside down. 

Powers: Oh, I did. By the time I got through- -by the time everything 
was through, there wasn't a group that hadn't reported to me, 
including Medical. [laughter] Security, Industrial Relations, 
all of them, you name it. And then all the engineering and all 
the big construction projects we went through, reported directly 
to me at one time. Our budget was just --it was up in the $4 
billion range a year. 

Hicke: What year are we in now, when you became head of Finance and 
Relations? 



Powers: Head of Finance and Relations, it would have been very shortly 

after I went back to Arabia, '71, senior vice president, you see 
then. In November '70, I was named vice president of Concession 
Affairs, we called it then, that's Government Relations. Then 
less than a year later, I was made senior vice president of 
Finance and Relations. 



436 



IV PRESIDENT OF ARAMCO . THEN VICE CHAIRMAN 



Powers: And then two years almost to the day beyond that, I was named 
president. 

Hicke: That was in '73. 

Powers: Yes, '73. 

Hicke: Well, those were pretty exciting years, too. 

Powers: Those were all exciting years. Those were the years that we 

went through the embargo , and while I did not handle the embargo 
directly, I was intimately involved with it and the decision 
making that went on at that time. 

Hicke: Can you describe it from your perspective? 

Powers: 1 was amazed that we as an American company could handle it so 
efficiently and smoothly with the Saudis, because the embargo 
was directed at the United States, clearly. The Saudis, in my 
mind, clearly differentiated between us as Americans and us as 
Aramcons . I would have thought that they would be highly 
suspicious of us administering their embargo. Ue had to 
administer it, we got our instructions from them, but we carried 
out those instructions to the letter. 

Hicke: So they were anti- American, but that didn't mean they were anti- 
Aramco? 

Powers: They clearly were not anti -Aramco , or they would have never 
trusted us to handle the most sensitive foreign policy issue 
that had existed in their lifetime. And they trusted us, and we 
sat down with them, we had daily contact with them, the people 
that we assigned to handle that embargo handled it absolutely 
impeccably, they didn't do anything they weren't supposed to do, 
they did what they were told to do by a sovereign government, 
and I am surprised that everything turned out as well as it did. 



437 



Hicke: 



Powers: 



Hicke : 



Powers : 



We put two guys in charge of it. One, Hal Fogelquist 
[spells], and Fred Moffett. Hal Fogelquist is still alive, in 
the Northwest somewhere, and Fred Moffett is now dead. Those 
guys ran that thing beautifully, and it was a complex 
arrangement, because we'd get new instructions from the 
government darn near every day, and sometimes two and three 
times a day. "Well, give our friends from Ceylon a special 
tanker of oil. You can load that." Or, "The amir of Tanzania 
called and King Faisal wants to accommodate him." So you see, 
there were all kinds of special categories of oil that they set 
up, and "take it out of this category, or take it out of that 
category. " 

"Well, where do we get it? You've got these other guys 
you're going to--" 

"Oh, well, go ahead and accommodate them," and we were left 
to referee and do all that stuff. And including handle all 
those sensitive sales to the United States. 

Let me ask first, why do you think they trusted the company so 
much? 

Because we'd built an absolutely sound relationship with the 
Saudi government over the years, and they knew they could trust 
us. I would say that there wasn't an element of distrust 
whatever in how that situation was handled, and in most 
situations with the Saudi government. Saudi government knew if 
Aramco said they were going to do something, they were going to 
do it. 

We had our counterparts in the government, and we'd worked 
with them for years. We were on first-name terms with all the 
ministry people, and they didn't have a lot of staff to run 
numbers and everything, and they'd often ask us for numbers that 
hurt their position, or that we could have changed to hurt their 
position or make our position look stronger. Well, we didn't. 
We gave them the numbers they asked for. They knew that that's 
what they were getting, and the guys that they did have were 
smart enough to see through anything, and it really would have 
been absolutely devastating to get caught in any kind of 
subterfuge . 



When you say 
Faisal? 



'they," are you mostly talking about Yamani and 



Yes, Yamani, Faisal, but it extended right on down to Knidr 
Herzallah, Ahmed Zamel, his representatives in Dhahran and 
Riyadh that oversaw the embargo itself --they were our daily 



438 



Hicke: 
Powers: 



Hicke: 
Powers : 

Hicke: 
Powers : 

Hicke: 
Powers : 



Hicke: 
Powers : 



contacts on it. And some of them whose names I'm not going to 
mention weren't all that competent, but they depended on Aramco 
to do their homework for them, too. They asked us to. Because 
they just couldn't do it. But that didn't make any difference, 
we did it for them, and sometimes it hurt us --but we did it. We 
gave them the data they asked for, and we never left anything 
out. 

Can you tell me about the shipments to the navy? 

I don't know enough about them to tell you. I know that that's 
one thing that never surfaced. I know that the government would 
have been highly embarrassed if it had surfaced, because here 
they are embargoing the United States, and still allowing 
shipment of fuel to the United States Navy, and on the same 
basis as before. There were explicit instructions; we got those 
instructions. They came verbally, but they came. 

Was this from the U.S. government right from the top, or what 
was the - - 

Oh, it had nothing to do with the U.S. government. We were told 
to keep right on delivering to the U.S. Navy by the Saudi 
government. 



But I mean who asked for the shipments to the navy? 
the U.S. mus t have - - 



Somebody in 



Oh, it was a longstanding arrangement, 
longstanding arrangement. 

Oh, they did, without any pressure? 



They just honored a 



They didn't cut it off or bobble it or anything. And the Saudi 
government would have been tremendously embarrassed, and I'm not 
even sure I should be mentioning it at this date. It could 
still be an embarrassment, I suppose. But the Saudis honored 
that agreement that they had with the U.S. Navy and allowed us 
to honor it, and told us in fact to honor it. 

That's really impressive. 

It was, because it could have hurt terribly. It would have 
looked like a sham. Here we are, embargoing Europe and the 
United States, but the Danes are our friends, so we'll give them 
some, [laughs] It was ad nauseam, the loopholes that they would 
think up. And every time a new cable would come in to King 
Faisal, he'd give it to-- 



439 



Powers: Every time a new cable came in to the king, he'd give it to one 
of his staff members to handle. "Now, you handle this," and of 
course, they'd come over and they'd get Moffett or Fogelquist on 
it, and they really just followed SAG's [Saudi Arabian 
Government] wishes, but they handled it brilliantly, they really 
did. 



Participation Negotiation! 



Hicke: Meanwhile, the price of oil was going up? 

Powers: Oh, the price of oil was going up. Here again, how do you know 
how things would have turned out. But I think if our four U.S. 
shareholders had been more perceptive --well, we couldn't have 
ended up worse, let's put it that way. Or we might have ended 
up a lot better, in world oil prices. But things were caught in 
such a maelstrom, there was such a tug-of-war going on between 
Iran and Saudi Arabia, each trying to outdo the other. 

Hicke: Out-produce, or--? 

Powers: Out-charge, out-earn the other, not necessarily out-produce, but 
charge more, and of course, when Iran jacked up the prices, why, 
Saudi Arabia said, "Now, we've got to jack them up too." Frank 
and I got caught in the middle on that issue four or five times, 
because the U.S. shareholders said, "No, we're not going to 
increase prices. We're just not going to pay any more for the 
oil." And then they'd send Frank and me in to talk to Yamani, 
and tell him why it wasn't in his best interest to increase oil 
prices. Well, of course, that's pretty hard to do. [laughs] 

Hicke : Yes . 

Powers: And Yamani saying, "Well, look, I can't get less than what the 
Iranians are getting. His Majesty has told me that I have to 
get at least what the Iranians are getting, maybe not any more." 
So we tried to haggle with him, because, well, we were only 
going to give a nickel a barrel or whatever the number, eight 
cents a barrel as I recall, more on the same grade of crude as 
the Iranian grade of crude is getting a nickel more on. Well, 
that excluded almost all Saudi crude, because we weren't selling 
much of the same grades. And Yamani said, "No, I've got to have 
eight cents a barrel across the board on all crudes." 



440 



So Frank and I thought that was the best offer we were ever 
going to get in our lives. So we went back and called the four 
U.S. shareholders and told them, "Well, Yamani has agreed to 
settle across the board for--" oh, did we get a tongue - lashing , 
oh, boy. "You guys encouraged Yamani to do that?" and 
everything. We didn't encourage him; you don't encourage Yamani 
to do very much. He does things just as he likes, and when they 
came up against him, they ran up against the same thing. But 
when we were the buffer, why, it was easy to shout at us. 

Hicke: You were caught in the middle. 
Powers: They couldn't shout at Yamani. 

So at any rate, we were back with what we thought was the 
best offer. Well, everything- -that eight cents a barrel, I 
don't know if it would have held the line for a month, a year, 
or a day, I really don't know. I just know we didn't try it. 
The U.S. four were infuriated with Frank and me, just 
infuriated. We had to fly up to Athens to get shouted at on the 
telephone. They didn't feel the phone into Arabia was secure, 
so Frank and I get on a jet, four hours up to Athens, get 
shouted at, four hours back. 

And they chose --these things are humorous now. And they 
were then; Frank and I could even laugh at them then. We 
laughed at them all the way on the way back on the plane, 
because it was so unrealistic. It wasn't the real world. 
Because it was easy to sit in New York and tell us to do that; 
"Now, you go back and tell him that--." And always the key was, 
"Tell him it isn't in his best interest to do this." [laughs] 

So Frank and I would get back on the plane, and we would 
laugh. But to call us all the way to Athens, four hours each 
way, just so --and they elected a spokesman, they always did 
this, and then they'd rehearse. Then he knew exactly what to 
say, if he was talking to Yamani, they'd rehearse all their 
lines, if they were talking to us, they'd tell their chief 
spokesman, "Now, remember to tell Brock and Frank this, and 
remember to do this." And then poor Henry Moses got elected 
that time to be the guy that took us to the woodshed. I felt 
sorry for him, because he obviously found it distasteful, 
because Henry was a real gentleman, and a very suave individual, 
a lawyer. 

Hicke: It strikes me, and I'm just throwing this out for your 

consideration, that a lot of this happened because the source of 
power in all this was kind of amorphous, or maybe it was 
disparate or-- 



441 



Powers: No. The source of power was truly the Saudi government, the 

Iranian government, and the oil companies refused to recognize 
that for literally years and years and years. 

Hicke: So they thought they were--? Oh, okay. 

Powers: They thought they had the power, and they did for years. They 
relinquished it very hesitantly. I guess that's natural, 
because their empire was coming apart. But they refused to 
recognize where the real power lay. 

Hicke: And that's what you were caught up in. 

Powers: We were caught up in it, and Yamani was pushing participation 
for years. 

Hicke: Right, that was another factor. 

Powers: And they were fighting participation tooth and nail. Whereas, 
they didn't end up any worse off or any better off by having 
fought it. I remember a trip I made to New York, and I got 
really yelled at by a guy named Gus Long, who was out of Texaco, 
and really belonged in the age of dinosaurs, he really was. 
Annapolis graduate, ran Texaco absolutely as a single-handed 
dictator. His own people were scared to death of him, all of 
them called him, "Yes, Mr. Long," "No, Mr. Long," I couldn't 
believe it. I went to a luncheon once, and all the top dogs 
were there. "Yes, Mr. Long." "No, that's right, Mr. Long." I 
couldn't believe it. 

So he was so mad at me, because he asked me a question 
straight on. He said, "Well, do you think participation is 
going to- -how are we going to be able to stave it off from now 
on?" I said, "You're not going to stave it off. It's here, you 
might as well recognize it and accommodate to it." And boy, he 
just- -oh. He went through the ceiling. I just told him that 
the Saudi government was going to prevail, and that was it. "I 
hate to hear you talk that way, that defeatist attitude will 
never get us anywhere. I was dealing with the" --and he used the 
word- -"savages years before you were." 

Hicke: Oh, dear. 

Powers: But I just plain told him that participation was a fact of life, 
and that if they wanted to keep it from becoming confiscation, 
they'd better accommodate. Because, in all fairness, Yamani 
wasn't heavy-handed, Faisal wasn't heavy-handed. The 
shareholders had such a vested interest that they were afraid of 
losing that it was just a monolithic standoff in all senses of 



442 



the word, except the shareholders didn't realize that they were 
playing the losing hand. They didn't hold the right cards. 

Hicke: Veil, it's always struck me that Aramco was not nationalized as 
other oil companies were. How do you explain this? 

Powers: Veil, because Tariki wasn't there, because Yamani and Faisal 

were. That's the reason we didn't get nationalized. If Tariki 
had been in power, I'm convinced we'd have been nationalized. 
The key factor was truly the personalities involved. 

Hicke: That's kind of the great man theory of history, in which the 
person who's there at the time makes a crucial difference. 

Powers: Makes a crucial difference. Yamani did not want to kick the oil 
companies out. He didn't want to nationalize. That wasn't his 
nature, wasn't his character. He didn't see that as in his 
country's best interest. Ve couldn't tell him that it wasn't in 
his best interest to do one thing or another, which we always 
tried to do. But when he recognized it, it was fine, and that 
was just the way it had to be. 

Faisal clearly recognized it, because the oil companies had 
really, in effect, built the country itself. They gave it the 
structure that it's got, gave it the impetus to come into the 
modern world. And the oil company hadn't been a real 
interference in the- -we didn't try to run their politics, like 
the British did in their various concessions; we didn't try to 
influence anybody to do anything other than make sure that we 
got the oil we wanted, got it out of there. Ve pretty much 
obeyed all the laws we could. Ve trained Saudis, which was a 
prime requisite. Ve were doing basically all the right things- - 
maybe not as many of them as we should have, but we were --and 
Faisal and Yamani both recognized this. And as a result, they 
really did not have a grudge against the oil company like the 
Shah did in Iran, and like they did in Iraq. Both because of, I 
think, in large part, the British influence. Because the 
British meddle in internal politics terribly when they get a 
country in their grasp. 

Hicke: Yes, well, they had several centuries of practice. 

Powers: Several centuries of practice, but the oil companies were very 
slow in recognizing that the government of Saudi Arabia had its 
own aspirations, and its own agenda. 

Hicke: The shareholder companies? 



443 



Powers: Yes. Because they had their own aspirations and agenda, and 

they didn't want to let go of this kind of--. See, they thought 
that all the oil that not only they sold but that they had 
discovered and was still in the ground should be theirs. They 
wanted compensation for all the oil still in the ground that we 
hadn't taken out yet but that they had discovered. Well, 
there's an element of logic to it, but not to a Saudi. 

But that was a time of really interesting negotiations, 
because Yamani, who didn't have a staff, would come up against 
these titans of the oil industry who had people running out 
there, running numbers, doing everything, coming up with every 
reason why not to do something, writing position papers, 
memorizing counterproposals and- -oh, you just name it. And 
Yamani would get out of bed, eat a leisurely breakfast, and all 
our guys are over at headquarters churning out last-minute 
position papers. 

And they just used so much talent and so much time on 
things that both Frank and I recognized as foregone conclusions. 
And it ended up just exactly where it was headed, no matter how 
much effort we put in to all this stuff. 

Hicke: And Yamani had no staff, to speak of? 

Powers: His staff basically consisted of one man, Khidr Herzallah, a 

Saudi nationalized Palestinian. He's still there, he's still a 
deputy minister who works for Yamani- -not Yamani, but the 
minister of petroleum, Hisham Nazer now. An extremely bright, 
competent man, and a reasonable man. For a guy that was in a 
position of being a naturalized Saudi, which are very, very few 
in number, and it's so noted in their passports, he did a lot of 
things on his own that were in the government's best interest, 
but also to be helpful and accommodating to the public. He was 
very good. I don't think you'll find anybody in the company 
that didn't trust him and like him. 

Hicke: I've kept you talking a long time, I'm afraid you're getting 

hoarse. So maybe you could tell me what are the highlights that 
we still need to hit? 

Powers: Oh, boy. 

Hicke: There's so much happening in the seventies that I don't know 

where to start asking you, and I don't want to keep you talking 
forever. 



444 



Eioansion of Production In the 1970s 



Powers: Well, the seventies --here again, I've really hit on the 

highlights of the seventies, because that's when the production 
went out of the roof, and that's when all these major 
negotiations were going on. That's when the embargo took place. 
The eighties were a time of retrenchment and falling back and a 
fall in oil prices and a lot of things like that, and it's a big 
change . 

But the big changes in our activities were during the 
seventies when our facilities just built up through the roof. 
We put in enough to produce on a sustained basis ten million 
barrels a day, and that of course is more than the United States 
produces. Russia is the only country that would out-produce 
that, and they'll go under that pretty soon just through normal 
decline in the reservoirs. 

So Saudi Arabia will be left for some time as being the top 
oil producer in the world, as far as capability. And when we 
did that, we did things that had never been heard of outside of 
I'd say a military operation, a war, because we had to mobilize 
hundreds of thousands of people. We had to move them and house 
them over there, we had to give them swimming pools, we had to 
build movie houses, we even went to the Far East and brought 
back a number of barges that we just stacked houses on to house 
2,000 to 6,000 Filipinos in, but they had to have ping-pong 
tables and rec rooms even then. We had to build outlying camps 
that housed thousands of people, that housed thousands of 
construction workers. At one time, we had twenty -two 
nationalities working for us. We were spending billions of 
dollars. 

And then on top of that, Frank gets the bright idea that 
the way to really tie up with the Saudi government- -and when I 
use bright, I mean truly bright; I wasn't being facetious. It 
sounds like it, but it was, on top of the oil expansion, then 
the government says, "Now, you conserve all the gas. You can't 
burn any more gas, and I want all these flares out in X number 
of years." Well, we're burning five to ten billion cubic feet 
of gas a day. Well, that is just an inordinate quantity of gas. 
You've got to process it, squeeze all the liquids out of it, 
sell what you can, make everything else out of it. 

That just doubled and tripled our capital budget right 
there, and then Frank gets the idea of lashing the Saudi 
government to Aramco and making us dependent on each other so 



445 



that nobody can ever kick us out. And he was right, he was 
right. He offered to electrify the Kingdom, the Eastern 
Province to start with. 

So he put together, and we worked on it for months- -a 
couple of years, as a matter of fact- -making presentations to 
Yamani on electrification of the Eastern Province, which up 
until then was just a series of little, tiny municipal 
electrification systems, each with its own generator and its own 
voltage sometimes. Some were on the French system, some had 
been put in by others; depended on whatever the municipality had 
bought. And then a lot of times, the electricity failed, you've 
got just one generator in the whole town. 

So Frank had the idea and we put together the cost. The 
owner companies were dead set against it, dead set against it, 
because they thought- -and they had reasons for it. They saw it 
would diffuse our efforts from the oil and gas business, because 
here we were building power lines, whole substations, whole 
power plants, everything. 

Well, Frank sold it to Yamani, and that bypassed them. 
That didn't make them particularly enamored of Frank or me, but 
that's neither here nor there, just that the government bought 
it. And now SCECO extends I think all the way to Riyadh, Saudi 
Consolidated Electric Company. We seconded people to it, we 
staffed it, we did everything and built up a whole separate 
company. Shares were sold in it to the Saudi public. We still 
had to finance it. We financed it with government funds that we 
just didn't pass on to the minister. We just took it out- -we 
got to the pot first. Thank God the owner companies paid us 
directly, then we took the money we needed, and what was left 
over the government got. Which is not the way the minister of 
finance likes things. 

I was sitting there with Frank one time, and we were in 
front of Mohammed Abu Al Khayl. He said, "Frank, I want that 
money to pass through the finance ministry, and I'm going to 
tell you right now, I'm going to direct you as a minister of 
this government that you go set it up to do so." Of course, 
Frank said, "You'll have to talk to Yamani." [laughter] That 
was the only answer he could give . 

So then that one added another couple of billion a year, 
and now that's accomplished. It's a going concern, apparently 
it's a blessing to the kingdom. 

And then I'm trying to think of a couple of other salient 
features that went. Boy, we had construction camps so big you 



446 



Hicke: 
Powers : 



couldn't believe it. Every nationalitywe had to police them, 
provide security. Now the Saudi government provided the 
military security, but I'm talking about internal, just like the 
Austin police department, we had to run that. Had to run 
everything: the bowling alleys. Just unbelievable. 

But we got it all put together. We had every pipe factory, 
every shipyard in the Far East tied up doing orders for Aramco. 
At one time, and it sounds like I chastise the parents [oil 
company shareholders], and I kind of do at times, but that 
doesn't make any difference, they had very competent people. 
But one time, they sent over their technical staff, and we had 
Just gotten the gas program under way. We had, like I say, 
every ship railyard, every foundry in all of Japan, all the pipe 
mills were turning out stuff for Aramco. And ships at sea, you 
couldn't believe the number of materials that were being 
fabricated to build the gas plants, the gas processing plants. 

Well, suddenly one of the bright owner company technical 
people says, "You're spending too much, and we can do it for a 
fraction of that." So they mentioned this to Abdul Hadi Taher, 
who at that time was governor of Petromin, which was a 
subsidiary of the ministry of petroleum. 

Well, Abdul Hadi Taher, who sat on our board at the time, 
blew the whistle. "No more comes in, no more." and God, we had 
things piling up in the Philippines and all over the world, 
billions and billions of dollars worth of stuff, that was coming 
out of the foundries, the sheet metal that was still hot. We 
had to stop everything, because we're not to spend another 
penny, all because an owner company said it could be done 
better. 

So a year later we had surplus material, had so much 
surplus stuff you couldn't believe. By that time, we couldn't 
put it anywhere. 

What year are we in now? 

Probably '81, '82, something like that. And we're infuriated, 
because we know we're doing the best job we can, and by the time 
it's all over, we've wasted roughly a billion dollars- -that was 
roughly what that little flap cost us- -and we're a year behind 
schedule. And it turns out we were doing it just right, and the 
costs were just what we said they were going to be. It's just-- 
by their saying that to Taher- -and they did it, they 
deliberately went to him to tell him that we were fouling up in 
order to build their own image. 



447 



Hicke: 
Powers : 



Hicke: 



And then the other thing they did that is critical in the 
last years of the relationship, that directly helped lead to the 
government takeover and that was going to happen anyway, don't 
get me wrong; there is no question about that- -was they tried to 
insinuate themselves into Aramco by offering all kinds of talent 
on loan. Oh, Aramco 's full of owner company people that have 
been seconded from the owner companies. They're not Aramco 
people. That's what made Aramco so successful: everybody there 
was a career employee. They didn't have a two-year job to do 
and then go back, because their interests aren't there then. 
Their interests are still back in Hoboken or wherever their head 
offices are. The British found this out for years, in Kuwait 
and places like that. They only seconded people there for two 
years. Well, they lost records, they lost continuity, the 
people didn't care, they really were back in Gulf Oil Company's 
headquarters in Pittsburgh or wherever it is, and they weren't 
career employees like Aramco had. 

Well, now Aramco 's full of owner company people, a lot of 
them dregs that they shoved off on us, because they were trying 
to clean their houses! [laughing] And then they got a fee for 
it from the Saudi government, for this so-called technical 
support. That was how they were going to keep Aramco and their 
oil in their hands. 

So they formed a separate company, and that was called 
STEMCO. I don't know if anybody's mentioned STEMCO. 

No . STEMCO? 

STEMCO, and that stands for Socal, Texaco, Exxon, and Mobil. 
Somebody back in New York thought that one up . And they were 
going to give advice to Aramco. Of course, it's just another 
layer of people on top of Aramco, and they got in our hair, 
because they had the authority to give us that advice, plus they 
talked Yamani into it. Yamani just let them do it. He didn't 
really care one way or another. What he was looking for was a 
way out of all the money they were making so that more of it 
could end up in the government treasury. 

So they ended up with a- -and I don't know how this ended 
up, I was not involved in it- -but they ended up with a twenty- 
two cent a barrel fee finally, instead of a profit, from the 
barrel of oil when they sold it back in the States. Every 
barrel they lifted, they got a twenty-two cent fee for 
delivering it and taking it away, and that was their revenue. 

STEMCO? 



448 



Powers: Yes. It went back to the four owners just like it used to. So 
instead of taking- -here's how I think it worked. And again, I'm 
a geologist. [laughter] But they used to lift the barrel of 
oil, they'd pay the government the royalties and the taxes for 
that barrel of oil, and then they'd go sell it for the best they 
could, and they'd keep whatever they got over the costs, you 
see. That's how they would get- -it was passed back to Aramco, 
and then on to them through dividends . 

Okay. Under the STEMCO arrangement, for each barrel they 
lifted, the government just gave them twenty-two cents, and 
everything else had to be repatriated to the government. 

Hicke: Why did the government agree to this? 

Powers: Well, because it was a better deal for them. It was less for 
the oil companies. See, twenty- two cents a barrel: they were 
making more than twenty- two cents a barrel on the earlier 
arrangement. So under the agreement, it's a fixed number for 
each barrel they lift now, you see, and that's what they've got; 
everything else has to be repatriated on a posted price basis, 
and that's fixed. And that's how the company has to account. 

So that put the revenues at twenty- two cents a barrel, and 
I think that's dead now too. I don't know how the arrangement 
works right now. I don't know who gets the money any more or 
anything like that, because I'm not privy to it and I really 
don't care, but I just know that STEMCO is dead. That was where 
I got into terrible hot water with the four owners. 

Frank asked each top executive to write a memo on what we 
thought of STEMCO, so he could talk to the four owners on it. 
Well, I wrote a blistering letter. Turned out everything I said 
was just exactly what happened, really, but it was doomed to 
failure. You can't have it in there sitting in the middle 
between the government and Aramco. It just isn't workable. But 
I gave many more sound reasons than just that as to why it 
wouldn't work, and they figured in a hurry whose memo that was. 
That really hurt. 

Hicke : The truth hurts . 

Powers: Yes. Well, it hurt me. It hurt me more than anything, in terms 
of --and it didn't help Frank. 

So that pretty much brings us up to date on the key things 
that I can provide. Let me just quickly whip down this list and 
see if any-- 



449 



Hicke: Yes. Well, I think we missed a few things, because the last 
time we heard from you, you were senior vice president. 



Vice Chairman. 1978: Working with John Kelberer 



Powers: Well, I became vice chairman in '78. And that's when we were 

having the big problems with shareholders, and that's when Frank 
was relieved. 

Hicke: So you worked with John Kelberer for a while? 

Powers: I worked with John Kelberer. He asked me to stay on; I said I'd 
stay on a year, which I did. 

Hicke: And then you retired in '79? 

Powers: March of '79. Took the company jet back here with Marte and one 
cat. We'd shipped the dog and other cat on already. 

Hicke: So can you give me a few impressions of John? 

Powers: An inordinately capable man. Frank and I picked him out of 

Tapline. At one point in time, Tapline was a really separate 
company. Then in order to draw it back into the fold and make 
it not operate so independently, I was made president of Tapline 
in addition to being senior vice president of Aramco. 

Hicke: It's too bad you had nothing to do all the time! 

Powers: Oh, I enjoyed that assignment, I'll tell you. Going to Beirut, 
Marte and I. God, they'd treat us like kings, which we didn't 
want, but the Lebanese were just so gracious. I was president 
for a number of years, and during that time, both Frank and I 
recognized John as being way above his capabilities in Tapline. 
Tapline just didn't have the need for a man of that quality, 
particularly with his handling--! finally got Tapline fully 
merged into Aramco, which was the directive Frank gave me at the 
time that we started down that road. 

But John was well liked, very, very smooth. By that I 
don't mean he was crooked: I wouldn't even imply that, because 
that was not what he was. He knew how to work with people and 
manipulate them to where he got what he wanted, very good at 
that, very good without doing anything untoward. 

I* 



450 



Powers : 



He was unique at working with people, 



Recollections of Working vith Frank Juncers 



Powers: The most unique man I've ever met at working with people is 

Frank Jungers, clearly. He had more workable solutions to any 
problem than any man I've ever known. He can come up with 
unique, competent approaches to problems that other people never 
even dream of. He's a very unique individual. John didn't have 
that talent, he had the talent more of working with people to 
get them to do the things he wanted. But Frank would come up 
with the ideas himself. Like his electrification idea. 

Hicke: So he has a wide-ranging mind? 

Powers: Oh, absolutely. Absolutely one of the most competent men I've 
ever met. And I've met lots of them. But Frank is one of the 
most innovative people I've ever met. In fact, I think if you 
just had to guess, he's right at the one or two top people I've 
known in their innovation. 

See, a lot of people have lots of ideas, and we've had a 
number of those in Aramco, but at least 75 percent of them are 
unrealistic or bummers that are going to fail. When Frank has 
an idea, it is going to work, and it often is unique. That used 
to be his strong suit. I noticed that time and again. He and 
Paul Arnot would lock horns , because Paul Arnot was out of 
Abqaiq too, and Frank followed him through that district manager 
slot, which Paul had been. 

Well, Paul had cherished the idea about how Abqaiq should 
be run and what should be done down there . Frank would come up 
with some innovative employee benefit or something like that; 
Paul would just dismiss it. Just dismiss it, say, "Well, Frank, 
that's a--." And Frank would say, "Now, wait a minute, Paul. 
Don't dismiss it out of hand. Listen to what I've got to say, 
and I've run these numbers, and this is what it looks like," and 
pretty soon Paul would buy it. 

Frank had the unique ability to do just exactly that, and 
come up with- -and he could work with Yamani better than anybody 



451 



I ever saw, except Bob Brougham. Bob Brougham and Yamani were 
close personal friends. Frank was a friend of Yamani, but not 
anywhere near as close and personal as Brougham was . 

And Yamani and I got along, but we were so different, 
because he is built out of a diplomat's cloth. He's the- -I 
don't know the consummate diplomat, or something like that, 
certainly not Henry Kissinger, but along those lines where you 
think like that all the time, and you look at the broad picture 
and synthesize ideas and concepts. 

Frank can do that. Frank was the best of all the CEOs I 
think we ever had, as far as being innovative, and he was always 
thinking of how to make sure that benefit plans were at the 
forefront of their time and everything. And he had a lot of 
trouble with the four shareholders, because see, when you've got 
four shareholders, the least common denominator prevails. So in 
industrial relation policy, we always ended up with Texaco 's 
plan, because they were the least humane or- -I can't think of a 
word. 

Hicke: Paternalistic? 

Powers: That's the word, exactly. And Exxon and Chevron were the most 

paternalistic, by far. Mobil was in the middle. But Texaco, we 
got caught time and time again because, "We can't give you 
something more than we've got, than our own employees get." So 
we ended up with that problem. 

Hicke: That's a good insight, though: you have to take what the lowest 
common denominator was . 

Powers: We did constantly. 
Hicke: Partnership. 

Powers: But Frank managed to work around that in a number of important 
cases. I couldn't cite one right now, but he did. And 
certainly in our medical facilities and medical benefits, oh, he 
got something done that I don't think any of the four U.S. 
shareholders ever got done. He got our benefits plans fully 
funded and our medical plans fully funded, so that they were in 
the plus side. When Frank and I left there, every fund, we had 
the annuity funds and things like that, was way over funded. I 



452 



suspect they still are, if they're still following the same 
procedures. But he, boy, getting that through the four U.S. 
shareholders, that was a miracle. But he did it. 

And he's still doing miracles, really, because I've been 
sitting in his office or his desk, something like that, when 
he's gotten phone calls from some of the chairmen of the boards 
of directors that he's on. Boy, they really think the world and 
all of him, and consult with him to make sure that they get his 
input in almost all they do. Very unique man. 

And so was John Kelberer, but nowhere near as innovative. 
Nowhere near as innovative. And I'm not saying that to be 
critical, because almost nobody else is, either. 



Aramcons and the Corporate Culture 



Hicke: Sounds to me like Aramco has had more than its share of uniquely 
competent people. 

Powers: They did. And another thing I would venture to say about 

Aramco: I do not recall --it had to go on, don't get me wrong, 
it had to go on- -I do not recall anybody in management from the 
manager level on up ever backbiting somebody else because they 
got the job or got the promotion that they didn't get, or do any 
infighting or try to say something--! don't recall that ever 
happening. I know that it's got to have happened, you just 
can't have a big organization- -it's just human nature to have 
that happen. I do not recall anybody ever saying a snide remark 
about somebody who got a promotion, or a break, or anything like 
that. 

I just remember, because I had such respect for the people 
that I worked with, and for, and worked for me. Because they 
were a talented lot, very talented. And don't get me wrong: we 
had our category fives, as we call them, and fours, category one 
being the top, and going on down, you had to grade on a bell 
curve for people to get promotions and raises. But we had 
category fours and fives, but we either weeded them out or put 
them somewhere where it wasn't devastating to fire them or 



453 



something like that, and then managed to make them do a credible 
job where they went. 

But 1 don't remember ever hearing a backbiting word 
about- -oh, Paul Arnot and Bob Brougham used to just go out and 
hammer and talk, but they did it right in front of everybody, 
and it wasn't nasty in the usual sense. 

Hicke: Somebody at the top somewhere must have established that kind of 
policy a long time before. 

Powers: Oh, this tenor was established by Fred Davies and Tom Barger, 
absolutely. This tenor was established. They're the ones who 
agreed they weren't going to build separate executive housing, 
and they perceived that it would do just what it would have 
done. As it was, the electrician lived next to the president, 
and that's the way it worked. 

And everybody socialized with everybody, across the 
spectrum. And that was another thing, there was a tremendous 
social life. There was a lot of partying. It was a British 
Africa kind of arrangement, where you had a lot of guests and 
the parties and things like that. You didn't have the club 
house you had in the British colonies, but you had the social 
life. 

Hicke: Makes for a good cement. 

Powers: It made for a good cement, because contrary to the British, it 

wasn't stratified. Quite contrary. But it was clear across the 
board. Marte's best friends are still the ones she made in 
Arabia, and a lot of them were draftsmen, which were- -I mean, I 
don't have anything against draftsmen, but they're not top 
management or anything. It just went clear across the entire 
spectrum. They entertained us just as much as we entertained 
them. It was a unique social structure. 

And as I mentioned up there , the only place I know where 
you had that and the educational level was possibly when they 
put that group together to build the atomic bomb at Almagordo, 
where they ran a highly educated group and a top technical group 
together into one compound, and they all had- -they wouldn't let 
them out to socialize, they had to internally socialize just as 
we had to do, except for occasional trips to Saudi 's homes. 



454 



But I can't think of another compound arrangement that 
would approximate that. You wouldn't have gotten it in the 
Canal Zone, because you didn't require college degrees for a lot 
of that. 

Hicke: Okay, that's what you were telling me at lunch, but we haven't 

got on tape yet, that you said practically everybody there had a 
college degree. 

Powers: In Aramco. 
Hicke: Yes. 

Powers: Exactly, they did. We were all professional people, basically, 
including nurses, you see, and everything like that. Now, there 
would have been mechanics, electricians, and drillers, many of 
whom did not have college degrees, but we socialized across the 
board with them just as much. In fact, [laughs] that picture 
you see up there, you see her, the lady with the pan? 

Hicke: Yes, the large one. 

Powers: Yes. That was over our top driller's bar for about ten years, 
sideways. [laughter] He called her Mother. We gave her away. 
And then when we went to leave Arabia, he said, "Would you like 
Mother back?" [laughter] 

Hicke: Oh, that's great. 
Powers: So she's seen a lot. 

At any rate, everybody, it was a cross -germination 
arrangement that was just amazing. But like I say, I don't 
think you could ever get that kind of a college level group 
together in one spot, or as technically competent a group in all 
respects as you had in Aramco at that point in time. Just 
amazing, the combination. Plus, it just takes, like I said, a 
certain personality to go to Saudi Arabia in the first place. 
You've got to have something wrong when you- -you know. You 
either have been come out of the marine corps or something 
equally foolish. 



455 



Hicke: It doesn't seem so unusual to me to want to go, but to want to 
go back and to stay there for a long time, 1 think that's what 
seems the most unusual. 

Powers: That's right. And you know, I was very reluctant to leave, and 
I'd been there thirty- three years. 

Hicke: Yes. That's truly amazing. 

Powers: And Syd Bowers that I told you about, he's been there over 
forty- -he was, until they threw him out, and he's just 
miserable. Just absolutely miserable. 

Hicke: He's the one that you said just goes from place to place now 
because he can't go back? 

Powers: He has an apartment share plan in Las Vegas, which is totally 
out of character for him, with the bright lights, but the only 
reason he likes Las Vegas is everybody else there is from 
someplace else. Nobody else is from Las Vegas. Nobody was born 
there, nobody lives there. That's a sort of a root, but he will 
only stay there two or three days at a time. He came here, and 
gosh, I saw him half a dozen times about a month ago, and he 
moved hotel two times while he was here. He just can't sit 
still. He's miserable. He really--! probably shouldn't say 
this --but he really wanted to die and be buried there, that's 
what he wanted. Because it's free, you see. He loves free 
things. [laughter] He wanted to be up in what they call the 
reclamation yard, where the cemetery is. 

But everybody in Aramco knows Syd. He used to end up 
wearing all my old clothes that Marte threw away. He was one of 
the most frugal people I've ever known, but when he gets out, he 
stays in some of the best places. Amazing man. Keen brain, 
keen mind. 



I'm trying to think of anything else that might be --let me 
just quickly look down this list that you had. 

Hicke: This list was just a stab in the dark. 

Powers: Well, we've touched on a lot of it, but not systematically I'm 
afraid. 



456 



Hicke: Oh, I think we did pretty well. 

Powers: Oh, incidentally, a friend of mine sent me this just a couple of 
days ago. He also is shown on it as deceased. 

Hicke: Oh, what have we got here? 

Powers: That's the Aramco World, which was a publication put out by the 
company. It was our slick publication. 

Hicke: My goodness. Richard Powers. 

Powers: Yes. Whoever wrote that article didn't know me, because I've 
never been called Richard. 

Hicke: Is that your real name? 

Powers: Yes, that's my real name. Brock is the name I go by. That's 
what everybody knows . 

Hicke: I didn't know that. Do you sign your legal contracts and all 
that-- 

Powers: I sign everything R. W. Powers. 

Hicke: R. W. , okay, I guess I did know that. 

Powers: But I always- -nobody knows me any way but Brock. 

Hicke: Where did he find this? 

Powers: He found it- -it's written on the back- -he found it in one of his 
old Aramco Worlds. I don't remember that picture ever being 
taken, and I don't remember ever being in the Aramco World. The 
only picture I had taken was a big one we've got about this big 
when I was on the exploration party, big beard- - 

Hicke: Four by six feet, it looks like. 

Powers: Well, yes-- 

Hicke: A beard? You had a beard? 



457 



Powers: Everybody signed it when Marte and I left at the party; there 
were over 400 people there . 

Hicke : Did you grow a beard when you went on- - 

Powers: Out in the field, yes-- 

Hicke: --field, because you didn't want to shave -- 

Powers: I was out for a while with a two-man party, just two of us out 
in tents, and I just didn't even want to fool around with it, 
because we'd go to work just as soon as the sun came up, you 
see, and come home by car light. Araznco World, September '54 
issue . That would have been when Marte had been there and I 
would have been- -but I never knew I was in it. 

Hicke: [laughs] Well, I really do thank you so much. 

Powers: Well, I appreciate your coming, and all your effort to put this 
together. I'll be interested to see what happens on it. Let me 
see, I know that list is- -[looking through papers] 

Hicke: Oh, yes, you were going to look in your-- 

Powers: I was just going to look to see- -members , board of directors, 
okay. Executive management committees, what were they, who 
headed. 

Hicke: I kind of have figured that out, other people have told me a lot 
about that . 

Powers: Yes. Okay. Problems with Saudi workers, except for Rock 
Wednesday, just the normal ones. 

Hicke: And I've also heard about the Committee on Agreements and 
Negotiations, unless you have some particular- - 

Powers: No, the only reason they had a Committee on Agreements and 

Negotiations was to exclude the Aramco member of the EXCOM from 
being involved so that he didn't get in cross -threaded with the 
Saudi government. Recognize Fred Davies--yes, I remember that 
gentleman well. God, what a fine gentleman. His wife was a 
jewel, too. Tom Barger, Floyd Oliger- -Floyd was a character. 
He just died. 



458 



Hicke: Did he? I didn't know that. 

Powers: He just died this week. Well, or within the past couple of 
days --or the past month, let me put it that way. Frank 
Jungers--he's still alive. Others- -Frank, amazing man. Can't 
say too much good about him. He really had the company's 
interests at heart. He had Frank Jungers' interests at heart 
too, don't get me wrong. He's a very stern, competent man. And 
when you have that kind of competence , you tend to overrun some 
people sometimes, because you know you're right, which he often 
did. He had some people get angry at him for those sorts of 
things, but his competence way overweighed any shortcomings. I 
never found him to have shortcomings really. I've known Frank 
for just about ever, and I've always had nothing but the highest 
respect for him. 

Life in Dhahran, yes. There was one. 
Hicke: Yes, we talked about that. 



Relationships Among Owners. Producers, and Competitors 



Powers: Formation of OPEC. That, the formation of OPEC, it was formed 
really before I was in any position in the company to be that 
interested in it. Role of Abdul Tariki, I've talked about him. 
We'd have been nationalized years earlier. There 'd have been a 
Saudi Aramco twenty years earlier, and you wouldn't have had 
expatriates still there from Aramco. Aramco wouldn't have been 
an active company still if Abdul Tariki had been there. He'd 
have brought in expatriates from other countries. 

Relationship between the company and the king: mainly, our 
relationship was with King Faisal. The subsequent kings- -Fahd, 
Khalid, we had relationships with but nowhere near the contact 
we had with King Faisal. I've got a picture in my 
granddaughter's bedroom, you can't see me because I'm cropped 
out of it, but I'm right behind King Faisal. [laughter] 

Relationship among owners: very suspicious, got along 
amazingly well with the diversity of interests they had and with 
the competitive arrangement they were in. I'm amazed, and I 



459 



Hicke: 
Powers : 



always was amazed, when they could come to some meaningful 
decision that was positive to Aramco and wasn't one they wanted 
to make for their own company's sake. Often, they wouldn't make 
the decisions like that, and they'd Just sit on them for years 
and years and the same thorn would be there for years . But 
every once in a while, they'd come through with things that they 
realized had to be in Aramco' s best interest and not their 
company's, and they'd go along with it. 

Amazing group of people, too. I had tremendous fondness 
for some of them, and tremendous respect for a number of them. 
A number of them were- -and it often depended on which company 
they came up in, because company management tends to use a sieve 
that's in their own likeness to let people pass through to 
replace them. 

Mobil was the worst in that regard. They had a chief 
executive officer there who I thought the world and all of, a 
guy named Raleigh Warner. He's still alive and he's still 
active on various boards. In fact, where did I see he's on a 
board here just recently? I saw him on a board. I thought he 
was honest as the day is long and everything, but he brought 
along a guy that he let do all his hatchet work for him, I guess 
with his tacit approval, or the guy couldn't have done it. 

Well, his character is flawed through and through. When 
you compare him with the others that are basically honest men. 

I thought Texaco was a problem. 

Texaco was pretty much of a problem, but at least Texaco- -Harvey 
Cash was a tough, mean man. I don't think he was basically 
dishonest. But Gus Long, who was Harvey Cash's immediate boss, 
was just a throwback, that's the only thing- -he's a dinosaur 
that didn't die off. Like I said, he'd call them savages and 
everything else. And he ran that thing- -there were foreign 
expenditures in the Texaco corporation itself, not in the 
shareholder group like ours, which is owned by three other 
companies . 

In this game, when you're trying to get along with a group 
of four people, plus a fifth group, Aramco, putting it together 
and making it function, you've got to lay the things you can on 



460 



the table, and what you do lay out has got to be correct. And 
that wasn't the case in some instances. 

Hicke: That would make negotiations pretty difficult, I would think. 

Powers: Well, nobody trusted them. So it protracted everything. And 

even Yamani commented on it, but that's another story. But here 
again, Yamani was very even-handed with the four shareholders. 
He treated them all alike. I'm not sure with how much respect, 
but he treated them all alike. [laughter] And he couldn't have 
had that much regard for them, because they made such fools of 
themselves sometimes when they'd come up against him. 

I remember one time in Geneva, we're sitting there in 
the --well, one of the main hotels, a very old one. We were 
sitting there downstairs, and we had rented this recital area. 
There was a piano sitting in one corner and a stage up in the 
other corner. Yamani chose to sit up on the stage, you know. 
And we're all these other guys sitting down around the table. 
They get out what we had labored over for days, what I called 
the green book, a book with twenty- eight questions to ask Yamani 
about participation. And there was an answer under each 
question, and they'd worked these questions and answers out with 
their staffs, and we spent midnight hours putting this damn 
green book together. 

I got in hot water because I told them it wasn't going to 
work, because Yamani hasn't read the damn thing. He doesn't 
have a script. And he never operated by script, anyway. 

Oh, he gets up on that stage, and Chuck Hedlund reads him 
the first question. It's memorized. Hedland didn't have the 
green book in front of him. And the answer they want from 
Yamani is memorized and was written down in the green book as 
well! [laughing] Of course, Yamani sees through it, and he 
goes into his act, and he raises his hand, and he plays Hamlet 
and Shakespeare right up there in front of all of us, ignores 
the question, goes on to three other things that have nothing 
whatever to do with the question that Hedlund asked- -so their 
script is destroyed with the opening question. And by then, 
they're answering something that they hadn't rehearsed, and it's 
just- -and he's loving it! And he's a consummate actor, he 
really is. Bright man. 



461 



Hicke: I can just tell from your gestures. 

Powers: Bright man, and it was all I could do to keep from bursting out 
laughing. I couldn't have known what Yamani was going to do 
specifically, don't get me wrong, but I knew what he was going 
to do in general, the pattern he was going to follow, and sure 
enough, he did. He left them just in chaos. Because they never 
got back to the green book again, and that was all they were 
authorized to speak on. It was their terms of reference which 
had been approved in New York City and San Francisco by their 
principals, and that was all they could talk about and were 
forced to respond- -"Well, we're not authorized to even think 
about that , Mr . Yamani - - " 

And here they are making- -they looked like what they were: 
errand boys. And you can't do that and cope with a problem of 
that enormity and complexity and a negotiation of that enormity 
without giving your people some latitude. And they were --boy, 
those four principals, which were the CEOs of the companies, 
would agree on the terms of reference, and that's all they would 
allow those guys to talk about. If he brings up this subject, 
you're not allowed to talk about it. You're to skip sideways. 
Or tell him it's not in his best interest. You know, this was 
the common phrase: "Oh, it's not in your best interest to go 
into that." And of course, Yamani decides what's in his best 
interest. [laughing] At any rate. 

Hicke: Wouldn't they lose a lot of face? 

Powers: Of course. And Yamani knew it. Finally, he said, "I want to 
deal with the principals," and he got the principals in there. 
They had also agreed on terms of reference. They worked all 
night and day on the terms. Same result, same catastrophic 
result. Yamani knew they were hobbled with terms of reference 
and so forth, and he'd jump off onto something that they weren't 
even prepared for or even discussed, and that house of cards 
just came tumbling down. 

Hicke: Oh, that's really fascinating. 

Powers: [reading outline] The Saudi social contacts, yes, relationships 
with Arabs, we haven't touched on that, but we had good 
relationships with a number of Arabs. There wasn't a lot of 
intersocializing, particularly, unless the people were in 



462 



commerce or contractors or things like this. Then we had a 
reasonable amount of social activity going on with them. 

And some of them were much more social than others. Some 
of them never entertained. Others, like Sulayman Olayan, who I 
think had a third- grade education through Aramco and turned out 
to be a multi-multi-multi-multi-millionaire, and still is, he'd 
read extensively up in Beirut, had apartments in Beirut, had 
houses in London and in New York, and that guy was a 
cosmopolitan individual. He entertained extensively, and we got 
to his place a number of times. Yamani entertained frequently, 
and Yamani entertained Barger when he left, and Brougham threw a 
big party for them, and we flew everybody over to their place in 
Riyadh and Hadda. And gracious, extremely gracious hosts. 

Relationship between the company and the king: the company 
has very little relationship with either Fahd or Khalid, because 
almost everything now is handled by Hisham Nazar, the minister 
of petroleum. 

Relationship among owners- - [laughs] . Very-- 



Powers 



Hicke: 
Powers : 

Hicke : 
Powers : 



Well, amazingly successful, though, when you consider all the 
divergent objectives of their own organizations. 

Role of the United States State Department: that was 
really a roller coaster ride, mainly because ambassadors are 
either career diplomats or just friends of presidents or other 
important politicians, like Jimmy Carter that are sent from 
Georgia. No, his appointee, West, was one of the best ones, as 
a matter of fact, but had no diplomatic training. 



Who was that, Aikens? 

No, Aikens was a career diplomat, 
frustrated with Kissinger. 

It was after him? 



He was the guy that got 



Yes. His name was West, 1 think, and he was a country boy from 
Georgia, and pretended to be --used it to great effect, and 
played the country bumpkin, but was smart, knew what he was 



463 



Hicke : 
Powers : 



Hicke: 
Powers: 



doing. He got along pretty well with the people. Aikens was an 
arrogant son of a gun, and everything was always in imperial "We 
did this , and we did that , " and he talked down his nose at 
everybody. But I got along fine with him, but he's still an 
arrogant- -I wouldn't get along fine with him in a social setting 
or anything like that. 

And we had the ones that were absolutely impossible, those 
were the Congressmen and their damn staffs that they'd bring 
along with them. They were arrogant, overbearing, often rude. 
The worst one was "Scoop" Jackson, Henry Jackson, who was the 
senator from Washington. 

I've heard about him elsewhere. 

He was just plain crude, and rude when he didn't even have any 
reason to be. All of them would come there and sing the praises 
of Israel, which is fine, that's their business, but why do you 
do it to Saudis, and just deliberately? It's a deliberate 
affront. And, "We're not going to change anything with our 
position with Israel, and if you expect us to, we're not going 
to do it for your oil or anything." This is so typical of them. 

They'd bring along Jewish members of their staff, which I 
thought was a credit to the Saudi government which let them in. 
They didn't make any issue of the matter it's just like during 
Desert Storm. Of course, they had different objectives then, 
but they never made any attempt to find out if they were of the 
Jewish faith or not. 



I haven't heard anything about him, Kamal Adham. 



I've 



Frank can probably tell you as much about him as anybody, 
met him on a number of occasions. He is a white-haired 
gentleman, looks like Colonel Sanders, sits and smokes a 
meerschaum pipe, and looks very learned, and is. Speaks 
excellent English, and you would never know he was for many 
years head of what would be our CIA, Saudi Intelligence- -it 
isn't anywhere near equivalent, but he was the internal 
intelligence chief for years and years and years. How he had 
latched in with the ministry of interior, I don't know. I just 
don't have any idea of how that was or worked. 



464 



But he was related to the royal family through marriage, 
and had a good safe berth, but they put him in charge of Saudi 
Intelligence, and he was well received by American intelligence 
agencies as well as by Aramco. Ve had an entree to him, and he 
never asked us anything about anything secret or anything about 
the United States or what our intentions were. He'd talk about 
Saudi problems and Saudi situations, and had a good grasp of 
what was going on around the world, very interesting man. 

"Yom Kippur War." 

Hicke : Well, we talked about that from your perspective. 
Powers: Yes. "Changes in the oil industry"- -yes . [laughter] 

Hicke: I like that. "Oil as a weapon" was- -I got that from a couple of 
books I read, which is all of what we've been talking about in 
the seventies. 

Powers: Well, oil used in the right way could be an enormous weapon. It 
could bring the industrialized countries in large part, with the 
possible exception of England now, to its knees very shortly, if 
you really cut off oil on a systematic basis in the Middle East 
and maybe a few other OPEC countries. Boy! Japan is totally 
dependent, most of Europe except for the North Sea, and their 
production and refining are very, very far from being 
self-sufficient. We're a long ways from it. So if you put on a 
very active oil embargo, it could have a devastating impact in, 
say, three months to a year. 

And this oil reserve, we're pumping oil into those--! bet 
they never get a barrel of it back. That would be my guess. I 
bet what is going to happen is it's going to be so saline and so 
hard to pump back and so expensive that they're never going 
to- -and number one, they're probably not even going to get 
enough of it in there to make a big difference. I perceive that 
as a major boondoggle, because they're not going to maintain the 
equipment, they're not going to do this, they're not going to do 
that, unless it's imminent. And they won't know it's imminent 
until it's too late. So I don't see that as a factor. 

The Prudhoe Bay, everybody talks about that, but that's 
already in decline in production. And besides which, so it 
produces 500,000, a million barrels a day? That's a fraction of 



465 



what we use, you see. It just isn't going to make a big dent 
for a long, long time, over a long period of time. 

Do I hear someone? Oh, I think your luck's about to run 
out: you're going to meet my granddaughter. 

Hicke: Good! 

Powers: Oh! Run for the hills. 

Hicke: I hope you have a voice left tomorrow. 

Powers: Oh, I will, I will. I'll drink a martini tonight, and it'll be 
fully restored. 

Hicke: I just can't thank you enough for the time. 

Powers: Oh, I appreciate your coming all this way, and I wish you well 
on your future contacts, and if you have anything whatever that 
you want that I can provide, I'll be glad to do it. 

Hicke: That's terrific. 

Powers: And you can call me, or I'll try to write it out. I'm terrible 
at writing: it's a labor of work, but-- 

Hicke: I'll remember that. I'll come back again. 
Powers: Please do. 



Transcriber: Shannon Page 
Final Typist: Melody Meckfessel 



Regional Oral History Office University of California 

The Bancroft Library Berkeley, California 



American Perspectives of Aramco, the Saudi-Arabian Oil-Producing 

Company, 1930s to 1980s 



Peter Speers 
RESEARCH, TRANSLATION, AND POLICY AND PLANNING, ARAMCO, 1950-1980 



Interviews Conducted by 

Carole Hicke 

in 1993 



Copyright 1995 by The Regents of the University of California 




Peter C. Speers 



TABLE OF CONTENTS--Peter Speers 

Interview History 
Biographical Information 

I BACKGROUND 466 

Childhood and Education 466 

Early Work Experience 467 

II ARAMCO: EARLY YEARS 471 

Joining the Company 471 

Studying Arabic in Cairo: 1949 472 

Saudi Arabia: First Responsibilities in Government Relations 474 

Tapline 475 

Visiting the Local Amir 477 

Measuring the Oil in Tapline 479 

III RESEARCH DIVISION 482 

George Rentz 482 

Research on Books 482 

Translation Division: 1952 487 
Political Problems of Aramco and the International Oil Business 491 

Further Education 492 

More on the Translation Division 493 

Pictures: Dhahran Housing, People, Places in Arabia 494 

IV GOVERNMENT RELATIONS: POLICY AND PLANNING STAFF 500 

Pricing of Oil 500 

The 1967 War with Israel and Arab Employee Protests 501 

Payday Thursday 503 

Noon Day Feeding 505 

Saudi-American Relations 506 

Company Officers: Davies, Barger, Ohliger, Jungers 508 

V MOVING TO TEXAS 511 

Orientation Program 511 

Retirement and Overview 513 

A Story of a Typical Employee Problem 514 



INTERVIEW HISTORY--Peter C. Speers 



Peter Speers has broad knowledge of Aramco and of Arabian affairs. 
Born in India of missionary parents, he went back to the United States 
for high school and graduated from Princeton College. He took an M.A. in 
Eastern Affairs there, studying the Arabic language as well as culture 
and customs. In 1950 he went to Saudi Arabia as part of Aramco 's 
Government Relations Department, and shortly moved into the Research 
Division. There he participated in preparation of books on Saudi Arabia. 
Much of the research was done to establish Saudi Arabian boundaries that 
were in dispute, a problem that arose from time to time. In 1952 Speers 
was put in charge of the Translation Division, then moved to the Policy 
and Planning Division of Government Relations Department in 1966. Here 
he researched and prepared papers on pertinent topics for company 
executives. In 1977 he was moved to Houston to set up an orientation 
program for new employees, and he retired in 1980, finishing his work on 
Aramco and Its World on a private contract basis. 

Peter Speers was interviewed in his Austin, Texas home on May 3 and 
4, 1993. He reviewed the transcript and added several paragraphs of 
further information. 



Carole Hicke 
Senior Editor 



September 1994 

Regional Oral History Office 

The Bancroft Library 

University of California, Berkeley 



Regional Oral History Office University of California 

Room 486 The Bancroft Library Berkeley, California 94720 

BIOGRAPHICAL INFORMATION 
(Please write clearly. Use black ink.) 

Your full name Peter Carter Speers Jr 

Date of birth 30 May 1921 Birthplace Murree, India (nnw Pakistan) 

Father's full name Peter Carter Speers 

professor of industrial 
Occupation chemistry / missionary Birthplace Bloomfield, N.J. 

Mother's full name Margery [sic] Kittoe Smith Speers 

Occupation R.N. / missionary Birthplace Tacoma, Washington 

Your spouse Ellen MacDaniels Speers 

Occupation retired Birthplace Cincinnati T Ohio 

Your children Peter III, Theodore, Martha (Blazewski) 

Where did you grow up? India (until age 13), then N.J. Pa. Conn. Mass. 

Present community Austin, Texas 

Education BA > Princeton; MA, Princeton; PhD, London 

Occupation(s)Government Relations Organization of Arabian American Oil Cn. 

(in Arabian Research Division, Translation Division, Policy ft Planning Staff) 

Areas of expertise writing, editing, research 



Other interests or activities photography , Travel, woodworking, philately 



Organizations in which you are active_ 



466 



I BACKGROUND 



Childhood and Education 

[Interview 1: May 3, 1993 



Hicke: I'd like to start this morning by just asking when and where you 
were born and grew up . 

P. Speers I was born in India, and grew up there. I lived there until I was 
thirteen, almost thirteen. 

Hicke: Where in India? 

P. Speers Lahore, which is not India now. It's gone and turned itself into 
Pakistan, but I think of it as India. 

Hicke: Might I ask what your family was doing? 

P. Speers Missionaries. My father had been there since 1914. He was there 
almost forty years. Anyway, I was born there in 1921. It was 
different in comparison with the Aramco situation, where people 
got to go home fairly frequently. 

In Aramco, we got regular vacations to go home. When I 
first joined the company it was every two years and later on it 
was every year, but with the missionary families, it was a seven- 
year thing, so you normally would work for six years and then you 
would get your sabbatical year and go home. Anyway, when I was 
almost thirteen, we went back to the States and I was left with my 
grandfather. My father and mother went back to India, and I lived 
with him all through high school. 

Hicke: Where did he live? 



symbol, ##, indicates the beginning or end of a tape side or an 
interruption in the tape recording. 



467 



P. Speers Montclair, New Jersey. And I went to school at the Hill School, 
in Pottstown, Pennsylvania. For a long period there I didn't see 
very much of my parents. After about three years they somehow 
scraped together the money to have me come out for the summer, 
which was a great trip. I don't know how I did it, a sixteen-year 
old kid traveling from New York to Bombay on his own. 

Hicke: On a ship? 

P. Speers Yes, of course. It was the only way there was. So I've seen a 

lot of ships. I was counting up recently. I think I've done the 

Atlantic by ship nineteen times. We're thinking of this fall of 
making it twenty, just for the record. 

Hicke: Great, that's terrific. 

So you went to high school, and then what did you do after 
that? 

P. Speers Graduated, went to college at Princeton. 
Hicke: And what did you major in? 

P. Speers Well, my first two years- -of course there was no such thing as a 
major, you didn't choose a major until you were a junior. But 
before I became a junior, I got drafted, so I majored in army. 

Hicke: Combat, or something. 

P. Speers Well, I was never in combat. There was lots of shooting going 
around, but I was never shooting at anybody. I was a radio 
operator. 



Early Work Experience 



P. Speers My first job, first real job, was when I was twenty. I got a 

summer job with a railroad in Wyoming. My Job title was Telegraph 
Helper. What Telegraph Helper meant was you were digging holes 
beside the tracks to put the telegraph poles in. [laughter] 

So I worked across Wyoming. 
Hicke: It was a new part of the country for you, right? 

P. Speers Oh yes, I met my first rattlesnake and so on. But anyway, when I 
got in the army, they filled out all this business about your past 



468 



experience and so on and I put myself down as Telegraph Helper. 
"Oh, then we'll put you in the radio school," they said. After 
three and a half years, I got out of the army and went back to 
Princeton. 

Hicke: So it's about 1945 now. 

P. Speers Yes, I was in what was called the School of Public and 

International Affairs, which was politics, economics, sociology, 
sort of a combination. 

Hicke: But with an international orientation? 

P. Speers In my case, yes. You had a lot of latitude to choose what courses 
you picked. At the end of my junior year, I heard about a chance 
to go work in Greece, which I applied for. 

Hicke: You were a traveler from way back, obviously, from your beginning. 

P. Speers Yes. What that was about was there had been a big civil war in 
Greece in '45. Following the withdrawal of the Germans, it was 
the communists trying to take over the country and the royalists 
trying to restore the monarchy and there was a great deal of 
fighting and killing and so on. So this was to be solved by 
plebiscite with the British and us and the Russians. Well, the 
Russians boycotted the thing, so it was us and the British running 
this plebiscite, observing it, and trying to make sure that 
everything was fair, and so on. So that's what this mission I 
applied for was about and I was one of the observers, election 
observers . 

Before election day, all of us observers split up and went 
all over the country, interviewing people and asking opinions, and 
counting houses, counting people, sort of taking a miniature 
census of the country. And all this was designed, dreamed up by a 
man called Edwards Deming, a statistician who later became very 
famous because he supposedly went to Japan and taught the Japanese 
how to do what they've done since the war. Well, in a sense he 
did, because his whole philosophy was based on quality control, 
not masses of throwaway junk, but "build it right." I'm not quite 
clear how statistics were part of this, but-- 

Hicke: Well, I suppose he needs statistics if you're going to do quality 
control. Was he a Brit? 

P. Speers No, he was American. As I said, he later became quite famous. 

It's interesting, you can look him up. He died in December 1993. 



Hicke: 



Where in Greece did you go? 



469 



P. Speers I went up Into the mountains in the northwest, near Albania. 
Hicke: There's a big gorge up there? 

P. Speers It's very mountainous, anyway. This has nothing to do with 
Aramco, anyway. [laughter] 

Hicke: No, I know, it's just interesting. Okay. 

P. Speers As I said, very mountainous, and at one point on a narrow mountain 
road I stopped the jeep I was driving and tried to turn around and 
I went too far and the jeep went over the edge. I was able to 
jump out just as it went over. I was a little shaken up. I 
wasn't really in the mood for sightseeing after that. 

Hicke: That was one gorge too many that you were driving on. [laughter] 

P. Speers Amazing. The jeep went over, turned over head over heels and 
landed upside-down. And from somewhere I collected a bunch of 
guys and we went down the hill and turned it rightside-up and, of 
course, it continued rolling down the hill another hundred yards 
or so. So we weren't going to try that again. We got a truck 
with a winch on it and pulled the jeep up onto the road. And the 
damn thing ran. 

Hicke: Amazing! 

P. Speers Drove back to Athens. Anyway, on the way to Greece, June '45, on 
the ship I met my wife. 

Hicke: Could you tell me her first name please? 

P. Speers Ellen. 

Hicke: And what was her maiden name? 

P. Speers MacDaniels. 

Hicke: And she was going to Greece? 

P. Speers Yes. She was a State Department employee. The State Department 
took on for the summer a bunch of college students, including 
myself, for the Greek election project. But she was a regular 
State Department employee on the Near Eastern desk at that time, 
which covered Greece and Turkey and Arab countries. 

We came back to the States at the end of the summer. I went 
back to Princeton and finished up in June 1947 and then decided to 
get an M.A. , so I stayed on for another two years and got an M.A. 



470 



Hicke: In? 

P. Speers What they called Near Eastern Studies. I think it must have been 
my senior year when I started studying Arabic. After I got into 
graduate school, I switched from Public and International Affairs 
into the Near Eastern program. Princeton, at that time had maybe 
the only Near Eastern Studies program in the U.S., certainly the 
best. Anyway, I went into that. 



471 



II ARAMCO: EARLY TEARS 



Joining the Company 



P. Speers As the end came near I started to think, "Well, what am I going to 
do now, and how can I use this stuff?" and one of the obvious 
things that came up, of course, was Aramco. 

I wrote to Aramco and a couple of other firms, Bechtel I 
remember was one of them, and they all turned me down- -except 
Aramco at that time had a program, it was sort of a college 
recruitment program, taking on college students who had an 
interest in the Near East and who they thought would work out well 
as employees in the Near East. It was really, I thought, a 
far-sighted program: get these guys young and direct their 
education a bit and bring them out to Saudi Arabia. That program 
was the brainchild of Colonel Bill Eddy. 

Hicke: What was his position with Aramco? 

P. Speers Consultant, I suppose. He had been born, I think, and certainly 
had grown up in, Syria and came to the States, and, before the 
war, was president of, I think it was Hobart College, which is in 
New York. And during the war, he was a lieutenant colonel in the 
marines, and was one of the early members of the OSS [Office of 
Strategic Services], which was the predecessor of the CIA [Central 
Intelligence Agency] . When Roosevelt met the king of Saudi 
Arabia, the one who's known as Ibn Saud, in '45, Eddy was the 
interpreter between Roosevelt and the king. And he later wrote a 
book about that meeting and what led up to it. 

I think it was one of his stories about the exchange of 
presents between the two leaders--! forget what the king of Saudi 
Arabia gave to Roosevelt, but it was something, and Roosevelt 
decided to give him a C-47, which was the first plane the Saudis 
had ever owned, I think. And, of course, that made a tremendous 
hit. 



472 



The British got their noses very much out of the joint, and 
so they sat around and said, "What can we do to get one-up on 
these guys?" and so they told the king they were going to give him 
a Rolls Royce, but "we don't have it for you yet. We're having it 
made and it will be great." The thing was finally completed and 
shipped out to Saudi Arabia. For one thing, they had made it 
left-hand drive, which the Saudis thought was outrageous, 
[laughter] Furthermore --you know, cars used to have running 
boards . Whenever the king or one of the amirs went somewhere , 
there were always two or three armed soldiers on the running board 
of the car. And that Rolls Royce had no running boards, so it was 
useless. [laughter] 

Hicke: The Americans stayed one-up. 

P. Speers Yes. Anyway, I'm not sure Colonel Eddy was even an actual Aramco 
employee or possibly was just a consultant, and he would come out 
and spend a few months in Saudi Arabia and a couple of months in 
Beirut with Tapline and the rest of the time in Washington, where 
Aramco had an office. And he thought up this recruitment program. 

Hicke: Did he do the actual recruiting also? 

P. Speers Yes. In other words, he did the interviewing. When I was called 
in for an interview, it was him and two others. One of them was 
the dean of the School of Public and International Affairs in 
Washington. That's a part of Johns Hopkins [University]. I was 
hired a year before I left college, so during my last year of 
college I was an Aramco employee. 

Hicke: This was what Colonel Eddy had in mind, so that your last year was 
directed, more or less, towards what you were going to do. 

P. Speers I had a salary, which wasn't tremendous, but it helped. Another 
thing they did was send me off for summer school at the school I 
just mentioned. The School of Public and International Affairs 
had a big summer session every year in New Hampshire and I went up 
for that. I took Arabic and I took oil economics, which put me to 
sleep. I was very much interested in Arabic, the language, mainly 
the language. I guess we had some history courses up there too. 



Studying Arabic in Cairo: 1949 



P. Speers Anyway, so when I finished and got the M.A. , Aramco sent me for 
six months to Cairo. 



473 



Hicke: This is maybe '49 or '50? 

P. Speers It was in July '49 I went to Cairo- -this is all part of Aramco--to 
the American University of Cairo, to study Arabic. 

Hicke: Can you tell me about the difficulties of learning the language? 
I mean, I know it's difficult, but is there anything else to be 
said for it? 

P. Speers Some people find it's just impossible, I think. Some people are 

very interested in it, and I've always been one of those. Whether 
it was French or Spanish or eventually Arabic, languages were 
always something I enjoyed, which I guess helped a lot in learning 
Arabic. 

Hicke: Compared to, say, a Romance language, how much longer would it 
take you to learn some Arabic? 

P. Speers It depends on what you mean by "some." I used to get a laugh out 
of these people who'd tell me that they didn't really want to 
spend a lot of time studying Arabic, just enough to read the 
newspapers, which was ridiculous. And those days, when I was 
studying it, it was all very old-fashioned. The method in Cairo 
was you'd go and sit with an old Shaykh, who didn't know any 
English, of course, and you'd read or try to carry on a 
conversation. I think there's been a lot of progress made in 
teaching languages now, so you can do it much quicker and probably 
learn better. 

Hicke: That's sounds like a very Moslem way of teaching. 
P. Speers Yes, come sit at the feet of the Shaykh. 
Hicke: Right, the prophet, or whatever. 
And how long were you there? 

P. Speers I was there for six months, and after I'd been there a month, 
Ellen came out and joined me. 

Hicke: When did you get married? 

P. Speers In 1946, right when we got back from Greece, or shortly 

thereafter. So she was with me the last three years in Princeton, 
and she came out to Cairo and was with me there and got a job at 
the American University teaching history of philosophy, which 
impressed me terribly. Not something I knew anything about, but 
they needed a teacher and she was there and she went to work. In 



474 



Hicke : 
P. Speers 



January of '50, I went out to Dhahran to go to work, and she 
stayed on in Cairo. 

Do you want to hear about her in Cairo, or you'll wait until 
you talk to her, or-- 

Well, let me talk to her about that, yes. 
Ask her about the spies. It's a good story. 



Saudi Arabia: First Responsibilities in Government Relations 



P. Speers In January of '50, I went to Saudi Arabia. Let's see, what was my 
first day? I suppose my first day was going around, being 
introduced and signing papers. My first job was loading trucks. 
At that time, the Saudi government had a big agricultural project 
near Riyadh, al-Kharj farms, which had been set up during the war 
with the advice and assistance of the United States Department of 
Agriculture. It was fairly fertile land, there was a lot of 
underground water, and there was some farming. The idea was to 
develop all this and get it going on a really productive basis, to 
supply Riyadh, the capital, with vegetables, fruit, so on. 

Aramco gradually became involved with this project during 
the war years, and at the end of the war, they left and the Saudi 
government asked Aramco to take it over. And Aramco, from then 
on, for quite a few years, recruited people to run the farm and 
work at it, and I think did some financial supervision. 

Anyway, they were all at this place, al-Kharj. The people 
living there, the American employees, had housing there of course. 
One of them, the manager, had his wife there, and child. But they 
depended on us in Dhahran for practically everything. All the car 
parts, the tires, any kind of maintenance work, and a lot of the 
food for the Americans came out of the Aramco commissary in 
Dhahran. Once a week, they'd send in a list of what they needed 
and I had to go collect all that stuff together and load it on 
four or five trucks with Saudi drivers. 



Hicke: What were you actually hired as? 

P. Speers I suppose it was Government Relations trainee, or something; I 
was in the Government Relations Department. 



475 



Anyway, for quite a few months, that was my life, loading 
these trucks and sending them off across the desert to al-Kharj. 

Hicke: How far away was al-Kharj? 

P. Speers Two hundred miles, maybe. 

Hicke: So it wasn't like ten miles out of town? 

P. Speers No, no, no, no. It must have been a twenty- four hour drive. No 
roads, of course. 

Hicke: Yes, I see your pictures. You just had to go all over the dunes 
or something like that? 

P. Speers Always tried to stay away from the dunes when possible. 
Hicke: You could go in between the dunes? 

P. Speers Yes, but you very often had to go across the dunes. I remember 
one accident when one of these trucks that we'd sent off came up 
over the top of the dune and there was nothing there. I don't 
think anyone was killed, but it messed up the truck and the people 
were hurt . 

Hicke: Do the dunes shift around in the wind? 

P. Speers Yes, they do. They move, they change shape. 

Hicke: So something like that could happen. That might be how that 
happened. 

P. Speers You can ask Powers about that sort of thing when you see him, 
because he was the geologist. 



Taoline 



Hicke: So you were at this for several months, you said. 

P. Speers Nine months, maybe. 

Hicke: Then were you trained? [laughter] 

P. Speers Apparently they thought so, but the next thing I was sent up to 
Tapline, as Government Relations representative. 



476 



Hicke: You say "up to Tapline." Where was-- 
P. Speers Tapline was north, 
[tape interruption] 

Hicke: We've just got Aramco and Its World here and we're going to look 
for a map. That's a wonderful book. It's really well done. 

P. Speers I hate these maps, really. They're somebody's cute idea of Saudi 
Arabia as viewed from space, and it's impossible to tell. 

Hicke: It's not even from straight overhead, it's at an angle. 

P. Speers Well, it's supposedly a satellite view and that's what you get. 

Hicke: Tapline started from Abqaiq? 

P. Speers That, for years, was a big arguing point between Aramco and the 

government, because the Saudi government was getting paid so much 
per mile, per barrel, for the oil going through. And Aramco 
claimed that the pipeline started here in Qaisumah and the 
government said, "No, it starts back here at Abqaiq." [laughter] 
Many years later that was settled, but-- 

Hicke: How did the oil get from Abqaiq to Qaisumah? 

P. Speers A pipeline, exactly like the pipeline that went from Qaisumah to 
the Mediterranean. 

Hicke: Oh I see. But it wasn't a Tapline pipeline. 

P. Speers No, but then the company's argument was that not everything going 
into Tapline is coming from Abqaiq. Some of it is coming from 
other fields farther north, so there was a shred of logic to that 
position. 

Hicke: Qaisumah was the gathering point for these lines? 

P. Speers More or less, yes, but almost all the oil was actually coming from 
Abqaiq which, at that time, was Aramco 's biggest field. 

Hicke: You were starting to tell me you went up to Tapline and I don't 
know where you went to. 

P. Speers Tapline, as I say, started at Qaisumah, went across northern Saudi 
Arabia and Jordan, and Syria, and ended up in Lebanon. And at 
intervals along here there had to be a big pump station to keep 
the stuff moving. In Saudi Arabia there were four pump stations. 



477 



The first of them was Qai